Prohibition of virtual currency transactions by payment service providers
Argentina’s central bank has advised that payment service providers must not offer customers trading and brokerage services for digital assets, including cryptocurrencies, which are not regulated in the country.
“Transactions and intermediation” refers to payment service providers themselves conducting such transactions or offering their users the ability to initiate transactions from their applications or web platforms.
More specifically, it went on to say that service providers will not allow users to “make auto-buy buttons available.” “Those who buy cryptocurrencies must carry out the transactions themselves.”
As of now, no further specifics have been provided, and it’s still unclear what features will be banned.
The Argentine central bank said in a statement that the purpose of the notice was “to mitigate the risks that transactions using these assets may pose to users of financial services and to the country’s payment system.”
Focus on cryptocurrencies in hyperinflation
Argentina has experienced repeated economic crises and hyperinflation, and virtual currency has been attracting attention in situations such as restrictions on foreign currency purchases.
More than 2.5 million people, or 5.6% of the total Argentinean population, are estimated to own cryptocurrencies, according to a 2022 study by crypto payment firm TripleA.
And nearly 51% of Argentine consumers have purchased cryptocurrencies, according to a survey conducted in April 2022 by Americas Market Intelligence. Twenty-seven percent regularly purchased cryptocurrencies.
Investment and hedging against inflation were among the top reasons for buying.
Argentine government tightening regulations
On the other hand, the Argentine government has also been concerned about the outflow of foreign currency out of the country due to the purchase of Bitcoin (BTC) by its citizens.
In July 2022, the Argentine central bank issued a notice that anyone who purchased Bitcoin or other cryptocurrencies with fiat pesos in the past 90 days will no longer be able to purchase US dollars at the official rate on the Argentine foreign exchange market MULC. bottom.
In Argentina, individuals and businesses with pesos in their bank accounts can use those pesos to buy U.S. dollars on regulated exchanges, which can then be used to invest in cryptocurrencies such as bitcoin.
The Argentine central bank intended to prevent such a transaction as it would mean the US dollar would flow out of Argentina.
The Argentine central bank also issued a notice in May 2022 stating that the country’s banks cannot conduct or offer to their customers transactions such as cryptocurrencies and their yield products.
There is also an agreement with the International Monetary Fund (IMF) in the background. In March 2022, Argentina signed a relief agreement with the IMF to avoid inflationary pressure and debt default. At this time, the agreement also included the phrase “deterring the use of virtual currencies.”
connection: Argentine central bank bans banks from offering virtual currency products
What is the IMF?
An international organization established in 1944 to ensure the stability of the international monetary system. It monitors the policies of 190 member countries, global economic and financial trends, and provides policy advice and recommendations. It also provides loans to member countries with balance of payments problems.