Financial institutions

Argentina’s Central Bank Considers Banning Local Financial Institutions From Offering Cryptocurrency Services

  • Despite the central bank’s tough stance, Argentina’s digital asset market has been booming for some time. The COVID-19 pandemic has hit the country, which has been dealing with an uncertain economy in recent years.
  • Argentina’s largest private bank by market value, and Brubank, Argentina’s digital bank, collaborated with crypto wallet Lirium to offer cryptocurrency services to customers earlier this week. Both sides cited the growing demand for digital goods among users, especially among younger generations, as the rationale.
  • Binance’s Latin American team estimated at the time that the number of new users in Argentina had tripled in a year. Additionally, Argentina’s vast territory, low electricity consumption, and favorable climate have helped the local bitcoin mining industry.

According to the BCRA, there are still no rules in place for the crypto industry in Argentina, so local banks can. The Central Bank of the Argentine Republic (BCRA) has banned domestic financial institutions from facilitating cryptocurrency transactions. The news comes just days after two of the country’s leading banks, Banco Galicia and Brubank, announced that customers will be able to buy digital assets through their official websites.

The Central Bank of Argentina has banned cryptocurrency offerings

Banco Galicia, Argentina’s largest private bank by market value, and Brubank, Argentina’s digital bank, collaborated with crypto wallet Lirium to offer cryptocurrency services to customers earlier this week. Both sides cited the growing demand for digital goods among users, especially among younger generations, as the rationale.

Nevertheless, Argentina’s central bank noted that domestic monetary institutions are prohibited from giving such chances as the BCRA has not yet implemented restrictions.

The BCRA Board of Directors has taken this step in order to reduce the risks that transactions with these assets may pose to users of financial services and to the financial system as a whole.

The BCRA, like many other central banks, has listed some of the most widely discussed potential dangers associated with digital assets. Bitcoin and cryptocurrencies, according to the institution, are extremely volatile and could be used for money laundering and terrorist financing.

While most crypto assets have significant price volatility, it is debatable whether they can easily be used in illegal activities. For starters, the bitcoin blockchain is completely transparent, as all transactions are recorded on the digital ledger and visible to all participants. Cash, on the other hand, is potentially elusive and is still commonly used in drug deals, arms financing, and prostitution, among other things.

ALSO READ – Why Does FTX CEO Think SEC-CFTC Cooperation Could Solve Crypto Regulatory Issues?

Argentina is indeed a good cryptocurrency region

Despite the central bank’s tough stance, Argentina’s digital asset market has been booming for some time. The COVID-19 pandemic has hit the country, which has been dealing with an uncertain economy in recent years. By the end of 2020, the financial crisis had deepened to the point that many locals preferred to invest in crypto rather than holding on to their depreciating fiat currency.

Binance’s Latin American team estimated at the time that the number of new users in Argentina had tripled in a year. Additionally, Argentina’s vast territory, low electricity consumption, and favorable climate have helped the local bitcoin mining industry. Several bitcoin exchanges have seen the trends and formed relationships with the domestic sports industry. Bybit announced a partnership with the Argentine Football Association (AFA) in November to become the team’s global lead sponsor. Binance followed suit soon after.

Latest posts by Andrew Smith (see everything)