The Central Bank of the Argentine Republic, (BCRA), has banned domestic financial institutions from facilitating cryptocurrency opportunities. This announcement comes a few weeks after two of the most important local banks, Banco Galicia (Brubank), announced that clients will be able to purchase digital assets through their official websites.
The Crypto Offerings are Block by rgentina’s Central Bank
This week, Banco Galicia, Argentina’s largest private bank by market value, and Brubank, Argentina’s digital bank teamed up with Lirium to offer cryptocurrency services to their customers. Both sides cited the high demand for digital assets by users as reasoning, particularly from younger generations.
However, Argentina’s central banking stated that they are prohibited from offering these opportunities because the BCRA has not yet imposed regulations.
“The Board of Directors of BCRA has ordered that the measure be taken to reduce the risk associated with the operations of these assets that could generate for users of financial service and the entire financial system.”
The BCRA, like many central banks, outlined the top-of-the-line risks associated with digital assets. According to the institution, bitcoin and altcoins can be used for money laundering and terrorist financing.
Although most crypto assets are subject to price fluctuations, it is possible to use them in criminal activities. One, bitcoin’s blockchain can be transparent because transactions are stored on the digital ledger. This transparency is visible to everyone.
Cash, on the other hand could not be traced and is still used in prostitution, weapon financing, drug deals, and other illegal activities.
rgentina is an excellent location for crypto
Despite the harsh stance of the central bank, Argentina’s digital asset sector has been flourishing for some time. In addition to an instabile economy, the country was also hit by the COVID-19 epidemic. The financial crisis had reached a peak at the end 2020. Many locals preferred to invest in crypto markets to avoid losing their fiat currencies.
The Latin American team at Binance had estimated that Argentina’s number of users tripled within 12 months.
The country’s large territory and cheap electricity have all contributed to the growth of local bitcoin mining.
Several cryptocurrency exchanges have partnered with domestic sports to take advantage of these trends. Bybit partnered last November with the Argentine Football Association to become the Global Major Sponsor for Argentina’s national soccer team. Binance followed suit shortly thereafter.
Featured Image Courtesy FT
Marla Brooks – Financial Analysis
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