- May 8, 2023
- Posted by: [email protected]
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The Argentine central bank has imposed a ban on payment providers offering cryptocurrency transactions, citing the need to reduce the country’s payment system exposure to digital assets. According to a statement from the monetary authority, payment providers may not offer or facilitate crypto services through their applications. The ban affects payment service providers that offer payment accounts and prohibits them from carrying out or facilitating operations with digital assets that are not regulated by the competent national authority and authorized by the Central Bank of the Argentine Republic.
The ban’s impact on the local crypto industry remains unclear, as payment providers have refused to comment on the decision. Argentina’s fintech chamber has urged the government to reconsider the ban, arguing that it limits access to a technology that offers multiple benefits and opportunities for society. The ban comes at a time when hyperinflation is driving cryptocurrency adoption in Argentina. In April, the price of Bitcoin hit a record high in the Argentine peso (ARS), with the BTC exchange rate crossing over 6.59 million ARS, up more than 100% year-to-date.
The popularity of Bitcoin in Argentina coincides with the ongoing devaluation of the Argentine peso, with the currency having fallen almost 50% against the US dollar in the past year. Inflation in the country also soared by 104.3% on an annual basis in March, following a 102.5% jump in the previous month, according to data from the national statistics office. In the midst of the ongoing economic crisis, even some Argentine cities are turning to cryptocurrencies as a safe haven. Last December, the Argentine province of San Luis allowed the issuance of its own stablecoin pegged to the US dollar, available to all residents and 100% collateralized with liquid financial assets.
According to Chainalysis, over 30% of Argentina’s users utilize stablecoins for everyday purchases, most likely for retail transactions under $1,000. The ban on crypto transactions by payment providers could have a significant impact on the use of cryptocurrencies in the country, as it limits access to a technology that many Argentinians are turning to in response to the economic crisis and inflation. The ban also highlights the need for greater regulatory clarity and oversight of cryptocurrencies in Argentina, as the lack of regulation leaves all coins and tokens subject to the decision of the central bank.
