Argentina’s central bank bans cryptocurrency trading

  • Unregulated crypto trading is a risk for investors and the financial system, says Central Bank
  • Pressure from the IMF following a recent debt restructuring agreement may have played a role in this decision

The Argentine central bank has decided to ban unregulated crypto transactions in traditional banks. Once considered a crypto-friendly country, the pendulum swings in Argentina after the International Monetary Fund (IMF) allegedly pressured politicians. This announcement comes a few days after Argentina’s largest private bank, Banco Galicia, decided to add crypto trading.

“Financial institutions may not carry out or facilitate transactions with their customers in digital asset trading, including crypto assets and those whose income is determined by fluctuations in the value of crypto,” the bank said. Central in the Republic of Argentina in a press release published Thursday. This represents an actual ban, as there are currently no regulated digital assets in the country.

The regulator said its actions are designed to “reduce the risks associated with” crypto, both for investors and “the broader financial system.” Argentina’s central bank says banks should focus their efforts on financing the real economy rather than digital assets. In addition, it implies that these transactions will involve unregulated entities established outside Argentina, which may violate applicable laws.

The action follows a warning in May 2021, in which authorities highlighted the risks of cryptocurrencies and advised investors to be “cautious” in their investment decisions. These risks include “high volatility, cyber attacks, money laundering and terrorist financing”, as well as cross-border currency trading breaches, the central bank said.

Last week, Banco Galicia and digital bank Brubank SAU revealed that they offer digital asset trading services, including common cryptocurrencies such as bitcoin, ether and USDC stablecoin. Until now, Argentines had to use centralized exchanges through wallets or trade directly through OTC exchanges.

In 2017, Argentina received a $ 44 billion rescue package from the IMF – the largest rescue package ever. The institution recently approved a debt restructuring agreement, and in tandem, the two parties agreed that Argentina would “discourage the use of cryptocurrencies in order to prevent money laundering, informality and disintermediation,” according to a letter of intent sent in March by politicians to IMF Executive Director Kristalina Georgieva. The stated goal was to “further maintain financial stability”.

The country has been struggling with high inflation and the devaluation of its currency, the peso, for years now. Argentina’s monthly inflation hit 6.7% in March alone, beating forecasts, according to the country’s latest data. The annual inflation rate reached 55.1% that month and reached its highest level in two decades due to rising food and energy prices.

Locals, in turn, began investing in cryptocurrencies to protect their savings from declining purchasing power, and employers were allowed to pay up to 20% of an employee’s salary in cryptocurrencies. However, the recent move by the central bank could reverse the trend of mainstream crypto-adoption in the country.

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  • Tiago Varzim


    Freelance journalist

    Tiago Varzim is a Portugal-based journalist covering macroeconomics, financial markets and digital assets in the EU. He works for the most important financial newspapers in Portugal. Tiago graduated from the Escola Superior de Comunicação Social in Lisbon with a degree in journalism.

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