On May 4, Argentina’s monetary authority issued a report revealing restrictive measures on crypto assets. The policymakers announced that the local payment platforms would be prohibited from providing crypto assets to Argentina.
Supporting the May 4 proclamation, the Central Bank of the Argentine Republic (BCRA) confirmed such restrictions aims at addressing the risk associated with cryptos. The BCRA team revealed that compliant payment service providers in the region are under regulatory agencies’ supervision and will be exempted from the crypto ban.
Will Argentina Accept Crypto Payments?
In the latter, the Argentina apex bank proclaimed that the new crypto provision aimed at safeguarding the customer from exploitation. The BCRA group added that the current prohibition on crypto assets seeks to minimize the exposure of digital assets on the Argentina payment platform.
The BCRA team revealed that most of the crypto assets in the region were unregulated. Therefore, the new regulation will apply to all payment services provided by fintech companies and financial providers.
The bank announcement created heated social exchange among the payment service providers in Argentina. A follow-up message from a fintech company revealed that the bank’s decision would prevent the consumers from accessing a platform that provided endless benefits and opportunities to society. After evaluating the benefits of crypto-related payment, the fintech company urged the BRCA to reconsider its May 4 announcement.
The prohibition will limit the operation of key players, including Uala and Mercado Libre, in Argentina. Also, some e-commerce services offered by Mercado Libre and its rival Amazon will cease to operate.
Factors Contributing to the Ban of Crypto Payments
A recent study on Argentina’s crypto adoption revealed that the prolonged hyperinflation in the region forced the public to shift to the digital space. It was reported that Argentina was among the top three countries stuck in economic depression.
In April, the inflation rate jumped by 104% to reach the all-time high realized in 2020. The high inflation subjected Argentina to a high cost of living that broadened the country’s poverty level.
In the same month, when Bitcoin (BTC) had regained bullish steam to break the $28000 resistance level, the BTC exchanges to Argentine Peso (ARS) reached 6.59 million. The surge in Bitcoin adoption motivated crypto proponents, including the famous politician Javier Milei to push for crypto adoption.
In his address, Milei labeled Bitcoin as a “savior” for Argentina’s unbanked and low-income earners. He lamented that the recent disappointment rooted in the devaluing of the Peso had compelled most of Argentina to adopt crypto assets.
According to Chainalysis, Argentina has a thriving market for crypto assets and ranks position thirteen in Global Crypto Adoption. Despite slow growth in crypto adoption in South America, Argentina has a positive stance on digital assets.
In 2022, the Argentina capital hosted the LaBitConf event that attracted a massive number of best-performing crypto investors and businesses. The keynote speakers at the event included the chief executive of MicroStrategy, Michael Saylor, and the co-founder of Ethereum, Vitalik Buterin.
In their speech, Saylor and Buterin expressed delight at the commendable growth of crypto in Argentina.