In Argentina, the Central Bank prohibits (Banco Central de la Republica Argentina, BCRA) the use of bitcoin transactions in an encrypted wallet. The Argentine Bar Association, however, sees a violation of the Argentine constitution.
It is therefore prohibited in Argentina for all payment service providers to offer cryptocurrencies to customers in any way in the future. Of course, this affects Bitcoin in particular, but the ban also includes Ethereum and all other coins, including new cryptocurrencies.
Argentina’s central bank largely bans cryptocurrencies for all professionals, but not citizens
Already last year, the BCRA Cryptocurrency trading prohibited by banks and business institutions. From May 2023, the central bank has extended the ban to all payment service providers. Again, all cryptocurrencies are affected, not just Bitcoin.
The ban not only affects the cryptocurrencies themselves, but also companies such as the popular payment app Load and the online market Mercado free,. Even the Uála payment app had to stop working completely.
In the text, Argentina’s central bank writes on Twitter: “Payment service providers are not allowed to make crypto asset transactions or make them accessible through their applications or web platforms.
Interested parties must carry out the transactions themselves”.
These services have proven that they cannot be guaranteed to work with crypto-activities and cannot be used to make requests on web platforms.
These people are interested in the need to realize las operaciones por su cuenta.
— BCRA (@BancoCentral_AR) May 4, 2023
The second sentence of the publication is interesting: “Interested parties must carry out the transactions themselves“. Therefore it is still allowed for citizens to make decentralized transactions to trade cryptocurrencies with each other and to buy cryptocurrencies.
Why is the Argentine government and central bank fighting Bitcoin and Co?
Argentina is not lucky with its public finances. In recent years, the South American country has repeatedly slipped into state bankruptcy and right now (once again) things are not looking very good.
Back in May 2021, the Central Bank of Argentina warned about the risks associated with Bitcoin and other cryptocurrencies. The National Bank then responded by May 2022 and no more bans on cryptocurrency transactions for all banks.
Currently the Inflation in Argentina at well over 100%which is likely in the long run the next national bankruptcy will lead. To ensure that citizens do not flee to cryptocurrencies, the BCRA wants to intervene in good time and ensure that this does not happen.
Argentina is very interested in cryptocurrencies: the IMF warns against it
As in many other countries, there is also a very high interest in cryptocurrencies in Argentina. The presidential candidate JMiley’s air He recognized this and sees Bitcoin as a great opportunity for all Argentines to save their money from state bankruptcy.
Over the past year, Argentina has been among the fastest growing crypto markets in the world. In 13th place, Argentina is well ahead of Germany (21st). The crypto analysis company Chainalysis came to fruition.
The central bank’s fight against bitcoin and other cryptocurrencies is probably also related to the fact that the International Monetary Fund is not very enthusiastic about El Salvador accepting bitcoin as a means of payment.
The IMF gives a clear warning about this. Because of Argentina now though IMF bailout loans needs, it can be assumed that the motivation here is the anticipated compliance from the National Bank of Argentina or indications from the IMF to do something in good time against the excessive influence of cryptocurrencies in their own country.
Argentina’s lawyers are fighting for cryptocurrencies
According to the Argentine Bar Association, the current ban goes too far. It amounts to “a serious restriction on legitimate initiatives that enable innovation, investment, financial inclusion and real employment in the country”.
The Bar Association is reviewing legal action and assisting lawyers to challenge the decision and represent companies that want to continue trading in cryptocurrencies.
Cryptocurrencies are a highly volatile, unregulated investment product. Your capital is at risk.