Argentina: Central Bank Announces About-Turn on Digital Assets

The Central Bank of the Argentine Republic (BCRA) has said that regulated financial entities should not facilitate operations in unregulated digital assets.

“The different actors involved in the operations with these assets may not be established in the country, which could generate departures from the general regulations, considered the BCRA,” the agency said. 

The announcement comes as a blow to the domestic crypto market after two local banks recently embraced the sector. Banco Galicia, one of the largest private banks in Argentina, and digital bank Brubank enabled the purchase of bitcoin, ether, and USDC by their customers. 

Reports suggest that the banks gave in to skyrocketing crypto demand in the country.

However, the monetary watchdog will now not only bar banks from offering crypto purchase options to clients but all assets “whose yields are determined based on the variations that they [crypto] register.”

Argentina embraces crypto despite lack of framework

In May 2021, the BCRA and the National Securities Commission (CNV) raised concerns over the possible risks posed by the asset class along with recommendations to mitigate such risks for users and investors.

The agency believes that crypto’s high volatility, the risks associated with operational disruptions and cyberattacks, and money laundering/financing of terrorism, among other potential non-compliance issues, make the sector risky.

Last month, securities regulator the CNV launched an innovation hub for the fintech sector that included regulations for crypto startups.

The system set goals to promote regulated innovation, financial education, and inclusion in the capital market, along with investor protection. 

However, there seems to be no specific framework for the crypto sector as of now. 

Chainalysis found that 1.3 million people or 2.94% of the country’s total population own cryptocurrency, putting it in the global top ten.

In March, the country recorded a decades-high inflation rate, reported Reuters, further driving adoption.