Argentina to tighten cryptocurrency regulation

Restructured IMF deal calls on Argentinian government to crack down on burgeoning sector

Argentina is reportedly preparing to bring companies operating in the cryptoasset sector under the umbrella of its anti-money laundering (AML) regulatory regime. 

An individual closely associated with the matter informed the Buenos Aires Times that the Unidad de Información Financiera (UIF), the nation’s money-laundering regulator, is working to add cryptocurrency service providers to the list of entities that are required to report and record customer transactions. 

The only regulation that currently applies to such firms is a piece of tax legislation from three years ago that demanded compliance with taxation reporting rules. 

Argentina and crypto

Although a global phenomenon, cryptocurrencies have attracted particular interest throughout Central and South America, with many attracted by the supposedly inflation-resistant and decentralised nature of the likes of bitcoin. 

With inflation in Argentina having soared to an annual rate of 52.3% in February, Argentinians have increasingly been flocking towards cryptocurrency credit cards. 

On Wednesday, Lemon Cash, the Argentine cryptocurrency exchange that provides many of these Visa-supported cards, announced that it will expand operations into neighbouring Brazil. 

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The IMF’s concerns

The rapid adoption of cryptocurrencies in Argentina has, however, seemingly provoked the ire of the International Monetary Fund (IMF). A recent deal, which restructures its loan to Argentina and provides more facilities for the country to pay the $45bn owed, included the statement: 

“The National Government, for a better safeguard of financial stability, will discourage the use of cryptocurrencies in prevention of money laundering and informality, likewise the digitisation of payments will have official incentives and additional protection will be given to the financial consumer.”

The IMF has repeatedly stressed its opinion that cryptocurrencies pose a threat to the monetary stability of nation states, and to the financial health of individual citizens due to their volatility and lack of consumer protection. 

It recently criticised El Salvador for making bitcoin legal tender, and called on President Nayib Bukele to reverse course.

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