Argentina’s central bank halts cryptocurrencies from payment apps

On May 4, Argentina's central bank banned payment providers from offering crypto transactions, claiming it intends to reduce the country's payment system's exposure to digital assets.

According According to a statement from the monetary authority, payment providers cannot offer or facilitate cryptographic services through their applications. The move brings payment fintechs and financial institutions under the same rules in the country.

"Payment service providers that offer payment accounts [...] They will not be able to carry out or facilitate operations with digital assets, including crypto assets, that are not regulated by the competent national authority and authorized by the Central Bank of the Argentine Republic,” said the authority. Cryptocurrencies are not regulated in Argentina, which means that all coins and tokens are subject to the decision.

It is unclear how the move will affect the local crypto industry. local media reported that the payment providers declined to comment on the decision. Argentina's fintech chamber urged the government to reconsider the decision, arguing that it "limits access to a technology that offers multiple benefits and opportunities for our society."

We invite the BCRA to review this measure and work together with the Argentine Fintech Chamber and other relevant players in the system to establish a framework that allows for the responsible and sustainable development of the crypto industry in Argentina.

— Argentina Fintech Chamber (@CamaraFintechAr) May 5, 2023

hyperinflation is Driving Cryptocurrency Adoption in Argentina. In April, the price of Bitcoin (BTC) hit an all-time high in the Argentine peso (ARS), with the BTC exchange rate topping 6.59 million ARS, up more than 100% year to date.

In March, inflation in the country soared 104.3% annually, after a jump of 102.5% in the previous month, data from the national statistics office. show.

Bitcoin's popularity in the country also coincides with the ongoing devaluation of the Argentine peso, Cointelegraph reported. The currency has fallen almost 50% against the US dollar in the last year.

In the midst of the current economic crisis, even some Argentine cities are looking for a safe haven in cryptocurrencies. Last December, the Argentine province of San Luis allowed the issuance of its own stablecoin linked to the US dollar, available to all residents and 100% guaranteed with liquid financial assets.

Chainalysis discovered that more than 30% of consumers in Argentina use stablecoins for everyday purchases, most likely small retail transactions under $1,000.