God’s hand ! – The Central Bank of Argentina (BCRA) has kibosh financial institutions offering crypto trading. This comes just days after two of the largest banks in the country have signaled that they are opening up to digital assets.
Argentina does not play with cryptocurrencies
Four days after two of Argentina’s biggest banks opened up to crypto trading, the Central Bank stepped in to block the offers.
Thursday, May 5, 2022, the BCRA has declared that this decision was intended to mitigate the risks that crypto poses to users. She also cited the risks posed “to the financial system as a whole”, citing the high volatility of the crypto. Its use in money laundering and the absence of regulatory safeguards also led to this choice.
The news follows last Monday’s announcement of two of the largest banks in the country, Banco Galicia and Brubank. They said they would allow their customers to buy Bitcoin (BTC), Ether (ETH), USD Coin (USDC) and Ripple (XRP).
The decision to open crypto trading was made following a survey conducted by Banco Galicia. Among the sample surveyed, 60% of people said they wanted easier access to digital currencies.
The Argentine Central Bank has long viewed crypto with a dim view. She had alerted the public in May last year to the risks of digital assets. Indeed, she was worried about volatility and money laundering. The bank also said there were no signs of “meaningful levels of acceptance and use” cryptos.
A high adoption rate… and restrictions
According to figures from data analysis form Statistics21% of respondents in Argentina had owned or used a cryptocurrency in 2021. Argentina has the sixth highest adoption rate in the world and, moreover, the highest in Latin America.
Argentinian inflation is still rising. It was estimated at 6.7% in March. This is the highest rate in 20 years. He reached 55.1% year over year, according to INDEC, the country’s statistics agency. Some Argentinians have therefore turned to crypto in an attempt to hedge against soaring inflation. In April, a rural town began to mine cryptocurrency to fight inflation.
The change in direction compared to last May could be linked to an extended $44 billion debt plan of the International Monetary Fund (IMF). One of the ambitions of the plan for Argentina was to to discourage the use ofare cryptocurrencies”.
The Central Bank’s announcement contradicts the plans of the mayor of the Argentine capital Buenos Aires. Indeed, at the end of April, Horacio Rodríguez Larreta announced his intention to digitize the city. Among other blockchain-related plans, he intended to allow citizens of Buenos Aires to pay their taxes in cryptocurrencies.
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