Crypto Transactions Ban: Argentina Central Bank Prohibits Payment Providers

Argentina’s Central Bank restricted financial payment services and providers from providing cryptocurrency transactions. The move was part of a more expansive plan to mitigate digital assets’ vulnerability to the country’s payment system.

According to the statement, payment providers, fintech companies, and financial firms will no longer be allowed to offer crypto services through their platforms or applications. As per the Bank of Argentina, any interested parties or cryptocurrency users must now carry out the operations on their own.

Companies within the cryptocurrency industry are unsure how the regulation and new ruling will impact them. The fintech chamber of Argentina has expressed opposition to the decision and is urging the national authority to reverse it.  According to the innovative branch, the ban significantly limits “a technology that offers multiple benefits and opportunities for our society.”

📈Sobre todo analizando el impacto que el sector que tiene en términos de generación de empleo, impulso a la innovación y exportación de conocimiento, elementos esenciales para el progreso económico y social de Argentina.

— Cámara Argentina Fintech (@CamaraFintechAr) May 5, 2023

Crypto Regulation in Argentina & Impact on the Industry

The Argentine government has recently adopted a fairly vocal standing on cryptocurrency. It warned cryptocurrency users in 2014 about the vulnerability of digital assets. However, the government recognized the economic benefits that blockchain and cryptocurrencies may provide in 2017.

In May 2019, the Central Bank issued new laws requiring cryptocurrency exchanges to register with the Financial Information Unit (FIU). This was to ensure compliance with anti-money laundering (AML) and counter-terrorism financing (CFT) legislation.

In addition, the government said in March 2021 that it would establish a new regulatory framework for the cryptocurrency business. A new regulatory organization, the National Office of Virtual Assets (NOVA), will monitor and supervise digital asset trade and transactions.

Furthermore, the authorities expected to boost the usage of cryptocurrencies in Argentina by enforcing regulations. The current Central Bank decision is a setback for entrepreneurship and innovation, and it limits Argentinians’ capacity to respond to the country’s long-term economic issues.

The current decision by the Central Bank of Argentina will impact the country’s cryptocurrency industry significantly. It will limit the opportunities available to crypto enthusiasts and businesses actively promoting the adoption of digital assets.

Moreover, the move might reduce investment and innovation in the sector. This might have an adverse impact on the broader economy. Therefore, due to the ruling, many unbanked or underbanked Argentinians are expected to experience limited financial inclusion and access to financial services.

The Central Bank of Argentina’s decision to prohibit cryptocurrency transactions created uncertainty in the market, restricting the potential for firms and enthusiasts and lowering financial inclusion for many Argentinians. In addition, to safeguard consumers, we need rules that balance encouraging innovation and supporting economic progress.

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