The Central Bank of Argentina has banned financial institutions from offering clients any operations involving unregulated digital assets, effectively banning engagement with cryptocurrencies.
The monetary authority issued the ban on Thursday, prohibiting financial institutions in the South American country from offering clients any operations that allow bank clients to purchase crypto. The ban also includes assets whose returns are determined by the fluctuations of cryptocurrencies.
The decision comes just days after two large institutions announced they would let clients buy Bitcoin and other digital currencies.
In a statement, the central bank said that it had taken this decision because “the risks associated with transactions involving virtual currency speculation, such as money laundering or exchange rate volatility, among others, could be magnified at this time of global uncertainty.”
The central bank further explained that it had “taken into account” the fact that “the use of virtual currencies can give rise to low financial stability risks if they increase without a commensurate strengthening of consumer protection measures or clear rules for their use.”
| Country | Index Score | Overall Index Ranking |
|---|---|---|
| Vietnam | 1.00 | 1 |
| India | 0.37 | 2 |
| Pakistan | 0.37 | 3 |
| Ukraine | 0.36 | 4 |
| Kenya | 0.29 | 5 |
| Nigeria | 0.28 | 6 |
| Venezuela | 0.26 | 7 |
| United States | 0.25 | 8 |
| Togo | 0.22 | 9 |
| Argentina | 0.19 | 10 |
Argentina has high crypto activity and high cryptocurrency adoption due to its long history of recurring economic crises and political instability. The country is one of the top 10 countries for Bitcoin trading volume, according to Chainalysis.com.
Legal Tender
The Central Bank of Argentina (BCRA) has clarified that it does not recognize cryptocurrencies as legal tender and that any transaction involving them is subject to the same rules that apply to other financial activities.
The entity considered that “crypto-assets are not legal tender.” The news was released in a communiqué published on the BCRA website on Tuesday, June 18th.
“Cryptoassets, which seek to be used as payment instruments or for investment purposes, are not issued or backed by a central bank or government authority and, as mentioned, do not meet the necessary conditions to be considered legal tender or negotiable instrument. As a result, their acceptance as a means of debt cancellation or to make payments in the economy is not mandatory,” he informed.
Crunchy Money that Melts
The ban on purchases through banks is part of an effort to prevent money laundering by limiting access to virtual currencies. However, users took the opportunity to remind the Central Bank of Argentina that the pace of printing new currency generates more risk by causing the “crunchy” money -from the newly printed bills- to “melt in your hands”.
© 2024 Cryptopress. For informational purposes only, not offered as advice of any kind.
