Central Bank of Argentina Bans Payment Firms from Offering Crypto

On Friday, Argentina's central bank declared that payment providers in the nation are not allowed to enable crypto transactions.

On Friday, Argentina’s central bank (Central Bank of the Argentine Republic (BCRA)) declared that payment providers in the nation are not allowed to enable crypto transactions, purportedly to decrease the region’s financial structure’s risk to digital assets. 

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PSPCPs Not Allowed to Deal with Crypto

As per a government announcement, payment providers may not sell or support crypto services on their platforms. The decision unites payment fintechs and financial institutions in the nation under a common set of standards. The regulatory body stated:  

“Payment service providers offering payment accounts (PSPCP) may not conduct or facilitate operations with digital assets, including cryptoactive, to their clients, that are not regulated by the competent national authority and authorized by the Central Bank of the Argentine Republic (BCRA).”

Major Hit on Payment Companies in Argentina

Notably, the cryptocurrency market in Argentina has not been regulated, therefore all cryptocurrencies and tokens are affected by the decision. According to local media, payment companies hesitated to speak on the matter. Argentina’s fintech chamber requested the authorities to overturn the decision, arguing that “it limits access to a technology that offers multiple benefits and opportunities for our society.”

Argentina Sees Inflation Rising by 104% YoY in March 2023

It is noteworthy that the price of Bitcoin in the Argentine peso (ARS) hit a record in April, with the BTC exchange rate surpassing over 6.59 million ARS, up over one hundred percent year to date. According to figures from the national statistics office, inflation in the country increased by record 104.3% year on year in March, following a 102.5% increase the previous month.

Bitcoin Outgrowing Peso

The growing Bitcoin adoption in Argentina correlates to the continued depreciation of the Argentine peso. In the last year, the currency has dropped over 50% versus the US dollar. Argentina and Brazil have explored a united currency. At the same time, Coinbase CEO Brian Armstrong endorsed BTC as a better choice for the Brazil-Argentina Common Currency. Furthermore, the country’s securities regulator approved an Argentinean futures index utilizing Bitcoin that was set to go live on the Matba Rofex exchange last month.