Argentina Enforces New Restrictions on Payment Apps, Bans Crypto Transactions

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Key takeaways:

  • The central bank of Argentina has announced that it will stop accepting cryptocurrency through payment apps.
  • Since cryptocurrencies are unregulated in Argentina, the judgment applies to all coins and tokens.

In an effort to lessen the country’s payment system’s vulnerability to digital assets, Argentina’s central bank on May 4 prohibited payment providers from enabling cryptocurrency transactions. 

According to a statement from the monetary authorities, payment service providers are not allowed to offer or facilitate crypto services through their applications. The adjustment subjects payment fintech companies and banking institutions to the same set of rules across the country. The authority declared:

“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 authorized by the Central Bank of the Argentine Republic,” 

Since there are no regulations governing cryptocurrencies in Argentina, the ruling is applicable to all coins and tokens. How the regulation might affect the local Bitcoin market is not yet apparent. According to local media, payment service companies apparently declined to comment on the decision.  

Argentina’s fintech chamber encouraged the government to rethink the choice, arguing that it restricts access to a technology that provides society with numerous advantages and prospects.

Argentina is leading the world in the adoption of cryptocurrencies. Bitcoin’s value in Argentine pesos (ARS) set a record high in April when the BTC exchange rate surpassed 6.59 million ARS, an increase of more than 100% year-to-date. The national statistics office said that the country’s inflation grew by 104.3% on an annual basis in March after increasing by 102.5% the previous month.

The widespread use of Bitcoin in the nation also corresponds with the Argentine peso’s continuous depreciation. The currency’s value as a percentage of the US dollar has dropped by nearly 50% during the past year.

Even some Argentinian cities consider cryptocurrency a safe haven amid the prolonged economic crisis. The San Luis province of Argentina authorized the production of its own stablecoin in December of last year, which was pegged to the US dollar and fully backed by liquid financial assets.

The adoption of Bitcoin as a savior for common Argentinians who cannot save or are being forced into poverty due to the collapse of the peso has been advocated by several cryptocurrency firms operating in the nation and even by one well-known presidential candidate. 

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