Argentine Central Bank rejects Banco Galicia and Brubank crypto bids

The Argentine Central Bank (BCRA) has vetoed the initiatives of two financial institutions that launched a crypto service for their customers this week. The International Monetary Fund is no stranger to this decision. As part of a deal to restructure the country’s debt, the organization demanded that the state slow the rise of cryptos within its borders.

Argentine central bank opposes crypto banking

Argentina’s Central Bank likely experienced a start-up delay and only reacted after the fact to crypto offers from two digital banks in the country.

Indeed, Banco Galicia and Brubank announced the launch of a crypto offering almost simultaneously through the investment portals of their websites. a priori, both seemed certain of the legality of their steps, but it was clear without counting on the vigilance of a central authority who denied them this right four days later.† The reason given is that crypto-assets are not regulated in the territory and as such cannot be the subject of an institutional service.

More precisely, the BCRA justifies its decision by the concern for prevention valued by regulators, in their role as consumer protectors

Central Bank alert to growing crypto adoption

To do so, its press release addresses arguments it made with the National Securities Commission in a May 2021 warning against the crypto market.

(…) the high volatility, risks related to operational disruptions and cyber-attacks, money laundering/terrorist financing and possible non-compliance with currency regulations, lack of safeguards and information that current regulations provide users with financial services and the cross-border nature of activities .

BCRA press release

An alert that didn’t come out of nowhere, but was registered in response to Argentinians’ enthusiasm for this asset class in light of the very poor economic conditions† let’s remember that inflation has peaked there: an average of 36% per year for ten years according to World Bank data, more than 55% for one year† In fact, faced with this chronic phenomenon, a growing segment of the population has turned to cryptos, and more specifically dollar-backed stablecoins, to counter the endemic devaluation of the local peso.

IMF pressure

In fact, if the Argentine Central Bank remains true to its desire to control and restrict cryptos, it is also the voice of its master, the IMF. The latter, however, has mainly made its aid to Argentina conditional on an anti-crypto clause.

Specifically, in exchange for a rescheduling of the country’s debt, amounting to nearly $45 million, and supported by other requirements, the Fund has included a provision explicitly targetingnt cryptocurrencies

To further maintain financial stability, the central government will discourage the use of cryptocurrencies…

Extract from the program of the agreement between Argentina and the IMF

Fact, Banco Galicia and Brubank appear as the first secondary victims of the blackmail of the big moneymaker

cryptocurrencies

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And this is probably just the beginning of the counteroffensive. Buenos Aires mayor Horacio Rodríguez Larreta, who had given the option to let citizens pay their taxes in cryptocurrencies in April, will no doubt also have to review his copy.

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