Argentina’s Central Bank has implemented a new regulation that prevents payment providers from facilitating cryptocurrency transactions on their platforms. The authorities aim to reduce the exposure of the country’s payment system to unregulated digital assets lacking national authority oversight with this move. The directive applies to both payment fintechs and financial institutions that provide payment accounts.
The decision of the Central Bank may have a significant impact on Argentina’s burgeoning crypto industry, which has been expanding rapidly amid the country’s economic crisis and hyperinflation. The price of Bitcoin in Argentine pesos achieved an all-time high in April, surging by more than 100% since the year’s commencement. However, the Argentine peso has lost almost 50% of its value compared to the US dollar over the last year.
Several regions in Argentina have already embraced cryptocurrencies as a way to hedge against inflation and currency devaluation. For instance, in December, the province of San Luis launched its own stablecoin pegged to the US dollar, which is accessible to all inhabitants and supported by liquid financial assets. Moreover, around 30% of customers in the country use stablecoins for day-to-day transactions.
This new policy could be a significant blow to the local crypto industry, as payment providers will no longer be able to offer crypto-related services to their clients. However, it is still unclear how effective the regulation will be in reducing the payment system’s exposure to digital assets since many consumers and businesses may opt for alternative payment options.