The Central Bank of Argentina Forbids Banks To Offer Crypto to Clients
Key Insights:
- BCRA, the central bank of Argentina, has banned banks from offering cryptos to their customers.
- The move aims to reduce crypto-related risks and their use in money laundering.
- It comes days after two top private banks in Argentina announced offering crypto trading.
Pro-crypto nation Argentina, which has one of the highest inflation rates in the world, recording over 50%, has now left the crypto community in the country in dismay.
Just days after two private banking behemoths in Argentina viz. Banco Galicia and Brubank launched crypto trading for assets including bitcoin (BTC), ethereum (ETH), USD Coin (USDC), and ripple (XRP); the country’s central bank has outrightly rejected lenders from offering cryptos to clients.
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BCRA Discourages Use of Crypto Assets
The Central Bank of the Republic of Argentina (BCRA) announced Thursday, asking its lender banks to stop offering cryptos to clients. The BCRA clarified that crypto assets are not regulated by the national authority nor authorized by the central bank.
The move was ordered by the central bank’s Board of Directors. The statement read,
“[The measure] seeks to mitigate the risks associated with operations with these assets that could be generated for users of financial services and for the financial system as a whole.”
This has left recent crypto newcomers in the country, Banco Galicia and Brubank, to possibly withdraw from their previous announcements on allowing crypto purchases.
However, the central bank doesn’t seem to embrace the demand for cryptos among Argentinians. Given the country’s high inflation rate, residents have increasingly turned to Bitcoin as an investment as well as to hedge the spiking inflation.
According to a crypto business support firm, TripleA, it is estimated that “over 1.3 million people, 2.94% of Argentina’s total population, currently own cryptocurrency.”
The Central Bank of Argentina reportedly wants to focus on activities of financial entities aimed at “financing investment, production, marketing, consumption of goods and services required by both domestic demand and export.”
Additionally, the bank stated cryptos’ highly volatile nature, cyberattacks, money laundering and use of cryptos for terrorism financing, and potential non-compliance with exchange regulation as possible threats substantiating the ban.
Banning lenders from offering crypto services comes a month after the International Monetary Fund (IMF) approved a $44 billion loan for Argentina to “discourage the use of cryptocurrencies.”