Argentina's central bank has imposed a ban on payment providers offering crypto transactions, citing the need to reduce the country's payment-system exposure to digital assets. According to a statement from the bank, payment providers are now prohibited from offering or facilitating crypto services through their applications.
The move brings payment fintech and financial institutions under the same rules in the country, with all coins and tokens not regulated by the competent national authority and authorized by the Central Bank of the Argentine Republic subject to the ban.
The ban has been criticized by the Argentine fintech chamber, which has urged the government to reconsider the decision. The chamber believes that the ban is limiting access to a technology that offers multiple benefits and opportunities for society.
The fintech industry in Argentina is likely to be impacted by the ban, which has come at a time when there has been a surge in demand for cryptocurrencies due to hyperinflation in the country.
Bitcoin has been particularly popular in Argentina, with the BTC exchange rate reaching over 6.59 million ARS in April, up more than 100% year-to-date. The national statistics office has reported that inflation in the country soared by 104.3% on an annual basis in March, following a 102.5% increase in the previous month. The Argentine peso has also fallen almost 50% against the US dollar in the past year, further fuelling demand for cryptocurrencies.
The ban on crypto transactions by payment providers is likely to have a significant impact on the adoption of cryptocurrencies in Argentina, particularly for small retail transactions under $1,000.
However, some Argentinian cities are turning to cryptocurrencies as a safe haven in the face of the economic crisis. For instance, the Argentine province of San Luis recently issued its own stablecoin pegged to the US dollar, which is 100% collateralized with liquid financial assets and available to all residents.
In summary, the ban on crypto transactions by payment providers in Argentina is intended to reduce the country's payment-system exposure to digital assets, but it has been met with criticism from the fintech industry. The ban will likely impact the local crypto industry, which has seen a surge in demand due to hyperinflation in the country. However, some Argentinian cities are turning to cryptocurrencies as a safe haven, and it remains to be seen how the ban will affect the wider adoption of cryptocurrencies in the country.
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