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Argentina’s central bank halts cryptocurrencies from payment apps

Argentina's central bank halts cryptocurrencies from payment apps

Argentina’s central bank has banned payment providers from offering crypto transactions, stating that it aims to reduce the country’s payment system’s exposure to digital assets. Payment providers are no longer allowed to offer or facilitate crypto services through their applications, bringing payment fintechs and financial institutions under the same regulations in the country. The authority stated that payment service providers may not carry out or facilitate operations with digital assets, including crypto assets, that are not regulated by the competent national authority and authorized by the Central Bank of the Argentine Republic. Cryptocurrencies are not regulated in Argentina, which means all coins and tokens are subject to this decision.

It is uncertain how this measure affects the local crypto industry, but local media reported that payment providers refused to comment on the decision. The Argentine fintech chamber has urged the government to reconsider this decision, stating that it limits access to a technology that offers multiple benefits and opportunities for society. 

Hyperinflation is driving crypto adoption in Argentina, with Bitcoin (BTC) reaching a record high in the Argentine peso (ARS) in April, crossing over 6.59 million ARS-value, up more than 100% year-to-date. Inflation in the country also climbed by 104.3% on an annual basis in March, following a 102.5% jump in the previous month, according to data from the national statistics office. Bitcoin’s popularity in the country is also coinciding with the ongoing devaluation of the Argentine peso, which has fallen almost 50% against the United States dollar in the past year.

ARS/USD chart. Source: Google Finance

Even some Argentinian cities are seeking a safe haven in cryptocurrencies amid the ongoing economic crisis. Last December, the Argentine province of San Luis allowed the issuance of its own stablecoin pegged to the U.S dollar, available to all residents and 100% collateralized with liquid financial assets. Furthermore, Chainalysis found that over 30% of consumers in Argentina use stablecoins for everyday purchases, most likely for small retail transactions under $1,000.