Within the Latin America region, Argentina is one of the countries at the forefront of cryptocurrency adoption, along with Brazil (see our previous article about Brazil), Colombia (see the article here) and Ecuador. In Argentina, the adoption of cryptocurrencies is driven by high annual inflation rates (y.o.y inflation of 78% for 2022 according to the Central Bank), rigid foreign exchange restrictions, which limit the amount of Argentine Pesos that can be converted into more stable currencies, preferably US Dollar as well as long-lasting distrust in the Argentine banking system. All these factors together make cryptocurrencies to be perceived as a way to hedge against inflation and stablecoins in particular as a mean of storing value.
Following similar considerations, more and more Argentinian employees are getting partially paid in cryptocurrencies with data from around the word showing that Argentina has the highest percentage of employees being paid in such a way. On top of that, in April 2022, Horacio Rodríguez Larreta, — the Mayor of Buenos Aires — announced plans to allow citizens to pay their taxes in cryptocurrencies. Likewise, the tax authority of Mendoza — Argentina’s 5th largest Province and home to more than 2 million people — affirmed in August 2022 that the payment of taxes with cryptocurrencies is possible.
Turning the focus towards digital asset regulations, it is to note that Argentina has not (yet) introduced a comprehensive digital asset regulation framework. Nevertheless, several regulations, decrees and alerts concerning digital assets were issued by the Government of Argentina, the Banco Central de la República Argentina (Argentine Central Bank), the Comisión Nacional de Valores (Argentine Securities and Exchange Commission) and the Unidad de Información Financiera (Argentine Financial Information Unit).
For instance, the Banco Central de la República Argentina (BCRA) together with the Comisión Nacional de Valores (CNV) published in May 2021 an alert on the risks and implications of crypto assets for users and investors as well as the financial system as a whole. Specific concerns mentioned in the alert include the high volatility of the prices of digital assets and cryptocurrencies; cyber-attacks; absence of safeguards, such as deposit insurance and other guarantees required by legislation for banking and investment services; fraud; and risks of money laundering and financing of terrorism.
In November 2021, the Government of Argentina stated in a decree that digital asset transactions become subject to the Impuesto sobre los Créditos y Débitos en Cuentas Bancarias y Otras Operatorias de Argentina (Argentina’s Tax on Credits and Debts in Bank Accounts and Other Transactions) effective immediately — making them subject to a tax of up to 0.6%, as it is the case for other banking transactions. This decree complements the 2017 reform of Argentina’s tax code, which made capital gains earned from digital asset transactions subject to income tax.
In May 2022, the BCRA announced a ban on service offerings by financial institutions for digital assets not regulated and authorised by the BCRA. This means that banks are no longer allowed to directly execute or assist their clients to carry out operations involving such digital assets, including the facilitation of buying and selling. This announcement came only days after two of Argentine’s largest banks, namely Banco Galicia and Brubank, disclosed that they will start to offer digital asset services, including assisting their clients to procure Bitcoin, Ether, USD Coin and Ripple. Important to note is however, that this regulation does not affect cryptocurrency exchanges, as they operate without a financial institutions license and that subsequently Argentines can still do trading over local cryptocurrency exchanges.
Lastly, the Unidad de Información Financiera (UIF) — the country’s money laundering regulator — is currently working on adding digital asset service providers to the list of entities subject to Argentine’s anti-money laundering legislation. Consequently, such firms will have to implement know-your-customer procedures, record customer transactions and report suspicious transactions. The new regulation is yet to be published, but will cause a major shift for digital asset service providers, as so far, they only had to comply with tax reporting requirements.
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