The ban is aimed at reducing the risks associated with transacting digital assets.
The Central Bank of Argentina has announced a blanket ban on banks and financial institutions looking to offer digital assets to their customers. The announcement comes days after two of the nation’s banks announced crypto offerings.
As reported by Bloomberg, On May 2nd,щь announced their plans to begin allowing customers to trade crypto through their investment portals. Now, the central bank has prohibited banks from offering trading services for assets it does not regulate. It also advised banks to focus on ‘financing investment, production, marketing, consumption of goods and services required by both domestic demand and export’.
According to Chainalysis, Argentina is one of the top ten nations with the highest crypto adoption rate. This is not surprising given the country’s high inflation rate and currency crisis. In 2019 alone, Argentina’s inflation rose to 53.8%. Thus, many have resorted to cryptocurrency to hedge their savings and maintain its value.
However, in March, the Argentine government noted it would discourage the use of digital assets in the nation. In restructuring its debts with the IMF, it promised to block the use of cryptocurrencies to prevent money laundering, informality, and disintermediation. These steps, it was believed, would further strengthen the country’s financial situation.
Ban on Digital Assets Cautionary
According to the press release by the BCRA, the ban is aimed at reducing the risks associated with transacting digital assets. It also banned assets whose prices depend on the volatility of cryptocurrencies. The bank had previously provided a nationwide alert on the possible implications and risks of digital assets.
Risks identified include high volatility, cyberattacks and scam, money laundering, non-compliance of platforms with regulation and absence of safeguards. It also recommended prudence in investing and using digital assets.
As it stands, Latin America holds the largest number of cryptocurrency holders in the world. In 2019, there were even indications it may become the new blockchain haven. With the right regulations, the region may be on the path to becoming the leading hub for the efficient use of cryptocurrencies. Already, Panama is headed in that direction with its recent crypto regulation bill.
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