Argentina Central Bank Bans Crypto Trading

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

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

“Financial institutions may not conduct or facilitate transactions with their customers in the trading of digital assets, including crypto assets and those whose income is determined by the fluctuation in the value of crypto,” the Bank said. of the Republic of Argentina in a press release published on 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 mitigate the risks associated with” crypto, both for investors and “the broader financial system.” Argentina’s central bank believes that banks should focus their efforts on financing the real economy rather than digital assets. Furthermore, it implies that these transactions would involve unregulated entities established outside of Argentina, which could violate applicable laws.

The action follows an alert in May 2021, during which authorities highlighted the risks of crypto-assets and advised investors to be “cautious” in their investment decisions. These risks include “high volatility, cyberattacks, money laundering and terrorist financing”, as well as cross-border currency trading violations, 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 bailout package from the IMF – the biggest 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 with a view to preventing money laundering, informality and disintermediation,” according to a letter of intent sent in March by politicians to IMF Managing Director Kristalina Georgieva. The stated objective was to “further preserve 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 rate hit 6.7% in March alone, beating forecasts, according to the country’s latest data. The annualized inflation rate reached 55.1% that month, reaching the highest level in two decades due to rising food and energy prices.

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

Get the day’s top crypto news and insights delivered to your inbox each evening. Subscribe to Blockworks’ free newsletter now.

  • Tiago Varzim


    Freelance journalist

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

Leave a Comment