- Uncontrolled crypto trading poses a threat to investors and the financial system, says the Central Bank
- Pressure from the IMF may have played a role in this decision, following the recent loan restructuring agreement.
The Central Bank of Argentina has decided to ban uncontrolled crypto transactions in traditional banks. Once considered a crypto-friendly country, pendulum swings in Argentina after pressure from IMF policymakers. The announcement comes just days after Argentina’s largest bank, Banco Galicia Cripto, decided to expand its business.
“Financial institutions will not be able to transfer or facilitate transactions with their clients in the digital assets business, including those that determine crypto assets and their revenues on crypto currency exchange,” the Central Bank of Argentina said in a statement on Thursday. This represents a real ban, as there are currently no controlled digital assets in the country.
The regulator’s actions are designed to “reduce crypto-related risks” both for investors and for the “overall financial system.” The Central Bank of Argentina believes that banks should focus their efforts on supporting the real economy rather than digital assets. Moreover, it indicates that these transactions include outsiders outside Argentina, which may violate existing laws.
The move follows a May 2021 warning, in which officials highlighted the dangers of cryptoassets 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 violations of the currency exchange, the central bank said.
Last week, Banco Galicia and Digital Bank Brbanbank SAU announced that they were offering digital assets trading services, including major crypto currencies such as Bitcoin, Ether and USDC stablecoin. To this day, Argentines have had to deal with centralized exchanges through wallets or direct counter exchanges.
A.D. In 2017, Argentina received a $ 44 billion bailout from the IMF – the largest package ever. The institution recently approved a debt restructuring agreement, similarly to a letter from politicians in March stating that Argentina “encourages the use of cryptocurrencies to prevent money laundering, irregularities and misunderstandings.” The goal, described by IMF Managing Director Crystalina Georgieva, was to “further secure financial stability.”
The country has struggled for years with high inflation and the collapse of its peso. Argentina’s monthly inflation rate rose to 6.7 percent in March alone, surpassing forecasts, according to the country’s latest data. Annual inflation hit 55.1% that month and reached its highest level in two decades due to rising food and energy prices.
Locals have begun investing in crypto to protect their purchasing power, and employers have been allowed to pay up to 20% of their wages in cryptocurrencies. However, a recent decision by the central bank could reverse the trend towards major crypto adoption in the country.
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