Argentina set to tighten its grip on crypto transactions by Benzinga [Advance Cash ]

Argentina Set To Tighten Its Grip On Crypto Transactions By Benzinga

Benzinga - Argentina's central bank is poised to tighten its grip on crypto transactions in the inflation-ridden country, after issuing new guidelines last week banning certain companies from certain activities.

Specifically, registered payment service providers known locally as PSPCP cannot conduct or facilitate transactions with digital assets that are not regulated and authorized by the central bank. The notice, dated May 4, says providers will not be able to perform transactions on their own, or initiate them on their web apps or platforms.

Companies officially registered with the central bank as payment service providers include major industry players such as MercadoLibre, Bind Pago, Mobbex, Nubi and Pomelo. The rules appear to target "automatic buy buttons" and interested users who wish to make such transactions "should do so on their own".

The central bank said the new measure was aimed at "mitigating the risks that operations with these assets could generate for users of financial services and the national payment system".

The use of crypto in the country has increased, especially as Argentines rush to protect their savings in the face of annual inflation exceeding 100%, multiple exchange rates and capital controls. Still, widespread adoption has encountered obstacles, particularly with fear of volatility and widespread skepticism about possible scams.

NGO Bitcoin Argentina says rules are surprising and arbitrary Bitcoin Argentina, an NGO that works to promote the use of cryptocurrency and decentralized technology in the country, called the measure surprising and arbitrary.

"It is unclear what purpose the central bank is pursuing in prohibiting activity that is wholly satisfactory and useful to local exchange customers," she said in an emailed statement. "This will have the immediate effect of making it difficult for Argentine workers and savers to access savings alternatives that protect them from inflation."

The NGO also indicated that it would favor informal solutions, "where the risks and costs are much greater for the saver".

Marcos Zocaro, an accountant and spokesman for the group, said the central bank's decision was reminiscent of steps it took last year to ban crypto transactions after a local bank began offering customers details the possibility of buying cryptos from a third party on its platform.

"In less than 48 years after that, rules forbidding Argentinian banks from facilitating the purchase of cryptocurrencies emerged," he said, adding that registered payment companies now face the same restriction. Of this group, Zocaro said MercadoLibre's MercadoPago service is by far the largest in the country.

"The rules are very gray though," he said, noting that there were still differing interpretations of payment service providers' ability to work with crypto exchanges. He said they would appear to be preventing MercadoPago from offering more extensive crypto services in Argentina like it does in Brazil.

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MercadoLibre did not respond to requests for comment.

Not all companies are affected by the new rules Argentinian officials caught the attention of some industry players earlier in the year when they told the International Monetary Fund that the country was taking "significant steps" to "discourage the use of cryptocurrencies with a view to preventing money laundering, informality and disintermediation."

The IMF did not respond to a request for comment on whether or not it intended Argentina to restrict crypto in the country as part of an economic support plan.

Binance, which launched a prepaid crypto card in the country with Mastercard last year, said it was unaffected by the new regulations.

“Our cash ramp, as well as Binance Card and Binance Pay, continue to operate as normal,” a company spokesperson said in an email response to questions.

Bitso, a Latin American-focused crypto exchange that operates in the country, said it was also unaffected by the new rules and noted that it is regulated by European authorities.

"Our whole team is working to understand the scope and implementation of the rules," the company said on Twitter, adding that it was not registered as a payment service provider in Argentina.

More reading: Crypto should be perfect for Argentina's currency nightmare. So why aren't more people using it?

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Image by Angelica Reyes on Unsplash

Read the original article on Benzinga