Taking a hardline approach to crypto, Argentina has imposed a ban on crypto transactions in traditional banks. The Central Bank of the Republic of Argentina said that financial institutions cannot transact or facilitate transactions with their clients in digital assets trading including crypto assets. The South American country doesn’t have regulated digital assets, but now there is a ban.
The Central Bank explained that its actions are designed to mitigate risks associated with crypto for the investors and the financial system as a whole. It says banks should focus their efforts on financing the real economy instead of digital assets. The Argentinian authorities had highlighted the risks of crypto assets, such as high volatility, terrorism financing, money laundering, and cyber attacks, in May 2021. They had advised investors to be prudent in their investment decisions.
Banco Galicia and Brubank SAU stated last week that they were offering digital assets trading services. This included mainstream cryptocurrencies – Bitcoin, Ether, and stablecoin USDC. The people of Argentina, to date, had to use centralized exchanges through wallets or trade directly through over-the-counter exchanges. The South American country, in 2017, received a $44 billion bailout from the International Monetary Fund, and it recently approved a debt restructuring deal. In its latest deal with the IMF, Argentina agreed to “discourage the use of cryptocurrencies” to prevent money laundering, disintermediation, and informality. This was reasoned to further safeguard the country’s financial stability.
Argentina has been fighting high inflation and the devaluation of its currency for years now. The country’s monthly inflation rate climbed to 6.7% in March 2022. Moreover, its annualized inflation rate hit 5.51% the same month – the highest level in two decades because of the surging food and energy prices.