According to the monetary authority, the prohibition aims to lessen Argentina’s payment system’s vulnerability to digital assets.
The central bank of Argentina prohibited crypto transactions on May 4 in an effort to lessen the vulnerability of the nation’s payment system to digital assets, according to the bank.
Payment service providers are not permitted to provide or enable crypto services through their applications, according to a statement from the monetary authority. The change places financial institutions and payment fintechs under the same set of regulations in the nation.
The central bank of the Argentine Republic’s central bank said that
“payment service providers that offer payment accounts […] may not carry out or facilitate operations with digital assets, including crypto assets, that are not regulated by the competent national authority and authorised by the Central Bank of the Argentine Republic.” Since cryptocurrencies are unregulated in Argentina, the judgement applies to all coins and tokens.
It’s unclear how the regulation would impact the regional cryptocurrency market. Payment service providers reportedly declined to comment on the choice, according to local media. The government was encouraged to rethink the decision by Argentina’s fintech chamber because “it limits access to a technology that offers multiple benefits and opportunities for our society.”
Argentina is leading the world in the use of cryptocurrencies. With the BTC exchange rate passing over 6.59 million ARS in April, the price of Bitcoin BTC $29,441 in Argentine pesos (ARS) achieved a new high — up more than 100% year to date.
According to figures from the national statistics office, the country’s inflation increased by 104.3% on an annual basis in March, following a 102.5% increase the previous month.
According to Cointelegraph, the increasing weakening of the Argentine peso and the rise in popularity of Bitcoin in the nation are related. In the last year, the value of the currency relative to the US dollar has decreased by about 50%.
Even some Argentinian cities are looking to cryptocurrency as a safe haven amid the prolonged economic turmoil. In December of last year, the Argentine province of San Luis authorised the creation of its own stablecoin that was backed entirely by liquid financial assets and matched to the US dollar.
According to Chainalysis, over 30% of Argentine customers utilise stablecoins for regular purchases, mostly for smaller retail transactions around $1,000.
