São Paulo Football Club Makes History with Crypto Acquisition of Giuliano Galoppo

Brazilian soccer club São Paulo has made history by acquiring player Giuliano Galoppo using USD Coin (USDC), a stablecoin. The transaction marks the first known use of cryptocurrency for a soccer player purchase in South America. The deal was facilitated by Latin American exchange Bitso, which partnered with Circle, the company behind USDC, to launch an international transfer product. While São Paulo may have benefited from reduced transaction costs compared to traditional SWIFT transfers, Banfield, the Argentinian club that sold Galoppo, faces challenges due to Argentina's strict foreign exchange regulations.

São Paulo Football Club Pioneers Crypto Transaction in Acquisition of Giuliano Galoppo

São Paulo, Brazil - In a groundbreaking move, São Paulo Futebol Clube, one of Brazil's most illustrious football clubs, has acquired Argentinian midfielder Giuliano Galoppo from Banfield. Notably, the transaction was facilitated through the transfer of USD Coin (USDC), a stablecoin, via the Latin American cryptocurrency exchange Bitso.

"This moment marks a historic milestone not only for Bitso and São Paulo but also for football in South America," declared Thales Araújo de Freitas, CEO of Bitso Brazil.

The utilization of cryptocurrency in this transaction is not a mere coincidence. Bitso, the first crypto unicorn in Latin America, has been an official sponsor of São Paulo since January.

Argentine Interest and Currency Risk

The announcement has generated significant attention in Argentina, particularly as it coincides with the nation's stringent foreign exchange restrictions. These regulations require exporters to convert their U.S. dollars into Argentine pesos within five days of a transaction.

The use of USDC could potentially circumvent these restrictions, as the Central Bank of Argentina (BCRA) regulations do not explicitly mention cryptocurrencies. In the event of forced liquidation by the BCRA, Banfield would receive 131 Argentine pesos (ARS) per U.S. dollar, significantly less than the prevailing rate in the financial and informal markets, which exceeds 300 ARS.

Dante Disparte, Chief Strategy Officer at Circle, a company involved in the issuance of USDC, suggested that the stablecoin was used "as a payment medium to mitigate currency risk."

Bitso's Role and Cross-Border Remittances

São Paulo's adoption of USDC is closely tied to Bitso's partnership with Circle in November. This collaboration resulted in the launch of an international transfer product that has yielded impressive results. In the first half of 2022, Bitso processed $1 billion in crypto remittances between Mexico and the U.S., a 400% increase from the same period in the previous year. The company aims to process an additional $1 billion by the end of December.

Currency Risk Remains

Despite the potential benefits of the USDC transaction, Banfield may still face currency risk. BCRA sources have confirmed that the club is obligated to convert the entire amount into Argentine pesos at the official exchange rate. This may result in a significant financial loss.

Challenges for Banfield

The use of cryptocurrency has also introduced additional complications for Banfield. Following a recent BCRA resolution, the club will face a 90-day ban from accessing the official exchange market to purchase new players at the official rate.

While the BCRA's compliance may result in Banfield receiving ARS 1 billion from the transaction, purchasing a player of comparable caliber would require ARS 2.4 billion in the local financial market. This is due to the BCRA's depleted foreign reserves, estimated to be in negative territory by over $4 billion.

Marketing Impact and Underlying Issues

Despite the marketing advantages of the USDC transaction, it has not resolved Banfield's underlying financial concerns. In fact, it may have exacerbated them. The club's inability to access the official exchange market for 90 days and the potentially large financial loss from currency conversion present significant challenges for the future.