Just days after Argentina’s two banks announced that they had opened up crypto trading to their customers, Argentina’s central bank (BCRA) announced that financial institutions cannot allow their clients to conduct transactions using digital assets.
Banco Galicia, a significant private bank, and Brubank, an all-digital bank, both stated on May 2 that users would be able to trade cryptocurrency through their investing portals on their websites.
However, because crypto assets are not regulated, the central bank has stated that financial institutions in the nation cannot offer this type of service.
“A digital representation of value or rights that is exchanged and stored electronically using Distributed Ledger Technologies (DLT) or other comparable technology,” according to Argentina’s central bank.
Argentina’s banks recently opened up crypto offerings
The central bank statement adds, “The action imposed by the BCRA Board of Directors strives to limit the risks connected with activities with these assets that might be produced for consumers of financial services, and for the financial system as a whole.”
Some Argentines have adopted crypto as a tool to more easily preserve money while dealing with the country’s high inflation rate, as well as the currency restrictions reintroduced by its current president, Alberto Fernández, in 2019.
However, as part of a roughly $45 billion debt restructuring arrangement with the International Monetary Fund, Argentina’s government said in March that it would prohibit the usage of cryptocurrencies (IMF).
The government said in a March 3 memorandum that it would “discourage the use of cryptocurrencies with a view to avoiding money laundering, informality, and disintermediation,” among other actions aimed at bolstering the country’s financial resilience.
The shift in focus from last May might be linked to the International Monetary Fund’s (IMF) $44 billion extended loan plan, which included a condition requiring Argentina to “discourage the usage of cryptocurrencies.”
The central bank’s statement contradicts the plans of the mayor of Argentina’s metropolis, Buenos Aires. Mayor Horacio Rodrguez Larreta revealed plans to digitize the city in late April, including proposals to enable inhabitants to pay their taxes in cryptocurrency and other blockchain initiatives.