A new law could help Argentina regulate its booming cryptocurrency market as the country aims to reduce risks such as money-laundering associated with the digital assets, experts say.
In the last year, Argentina saw $85.4 billion worth of crypto transactions, making it one of the largest crypto havens in the world, according to data platform Chainalysis, as Argentines seek to battle triple-digit inflation and a struggling currency.
On Wednesday, the Argentine government signed a fiscal package that includes tax amnesty for individuals who declare up to $100,000, including registered crypto assets.
Roberto Silva, president of the National Securities Commission, said the amnesty could ease pressure from the Financial Action Task Force (FATF), an organization tied to the World Bank, IMF, and United Nations, to regulate Argentina’s crypto market.
“Today, we are focused on amending everything that has to do with money-laundering and reporting entities,” Silva said.
The FATF has threatened to move Argentina to its grey list, a step that increases monitoring of the country and could stifle foreign direct investment, increase international interest rates, and risk a GDP decline, according to an IMF analysis.
Silva said registration of crypto assets is the first step toward regulation. He hinted the rules will likely follow those put in place by the United States.
Ignacio Gimenez, executive director at Lemon Cash, one of Argentina’s largest crypto exchanges, said the exchange has updated its system to let users voluntarily register assets with the government.
In May and June, Argentina intensified its crackdown on crypto-related crime. The prosecutor’s office carried out 64 simultaneous raids that led to 20 domestic and 10 international arrests tied to smuggling, money-laundering and illegal gambling.
Argentine leaders will meet with FATF in Paris in October as the task force continues to assess the level of Argentina’s money-laundering and terrorist financing.
Crypto adoption spreads in Argentina even as central bank tightens rules
Argentina is ripe for cryptocurrency disruption. Decades of distrust in the banking system, high inflation, and strict limits on how many pesos can be converted into more stable currencies like the dollar have increasingly pushed savers towards cryptocurrencies.
Younger generations in particular see it as a way to shore up their savings, as annual inflation soars past 55 per cent and levels of government intervention in the economy climb. Last year Argentina recorded the 10th highest rate of cryptocurrency adoption anywhere in the world and one of the highest in the Americas, according to the Chainanalysis index.
But even as more people sign up, the country’s central bank is tapping the brakes out of concerns linked to a $44bn IMF debt restructuring deal signed in March.
Starting this month financial institutions in Argentina can no longer offer cryptocurrency related services, like buying and selling crypto through their digital wallets and mobile banking apps or setting up a crypto exchange. The decision came just days after Argentina’s largest private bank, Banco Galicia, and online bank Brubank announced plans to open up to digital assets by allowing users to buy different digital coins through their investment app.
Central bank officials said the move was intended to mitigate the risks crypto poses to users and “to the financial system as a whole,” citing concerns about volatility and money laundering.
