The Central Bank of Argentina took steps to prohibit private banks offering cryptocurrency services in Argentina. After two banks started to offer cryptocurrency purchase services through their apps, the Central Bank of Argentina took this action. It is believed that the measure was taken to mitigate risks related to cryptocurrency assets.
Central Bank of Argentina closes banking crypto offers
The Central Bank of Argentina tightens its permissiveness regarding the link between private and cryptocurrency banks. This document relates to the provision of trading and purchasing services for cryptocurrency through these institutions. It also prohibits them from facilitating transactions that could be harmful to Argentinian citizens.
This document describes:
It is illegal for financial entities to facilitate clients’ operations using digital assets. This includes crypto assets.
The institution also claims that this is an attempt to reduce the risks that users and financial institutions are exposed when they use these assets for investment purposes. Banco Galicia (a private bank) and Brubank (a financial institution in the country) had earlier announced that they will be introducing cryptocurrencies into their services to customers.
Others Motives
Some local media outlets suggest that there could be more to the ban by the central banking. According to reports, the organizations had already spoken with the central bank privately and were given an approval nod by the central bank due to the unregulation of cryptocurrency-related banks.
Per financial sources, the cryptocurrency operations might also cause a demand in dollars that would increase the breach between the official dollar price and the dollar on the black market, called the “blue” dollar. Argentina’s exchange controls could have been a factor in stopping these operations earlier than they were more critical to the overall economic picture.
It has not changed the value of the blue or official dollar. However, the latter is approximately 80% less expensive than the former. Therefore, the volume traded in these volumes did not have any effect on this exchange rate.
A possible explanation for the measure could be the International Monetary Fund’s agreement with Argentina to pay off its debt. This deal includes a condition that Argentina disincentivizes the use and promotion of cryptocurrencies. Private banks would not be allowed to provide these services.
Let us know your thoughts on the Central Bank of Argentina’s resolution that prohibits banks offering cryptocurrency to customers. Leave your comments below.
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