Argentina’s central bank issued a statement on Thursday stating that the country’s financial industry is not permitted to provide unregulated services related to digital assets. This basically bans the use of cryptocurrency in the current economy. The action comes a month after the IMF said to provide a $45 billion loan to Argentina.
Following the approval of a $45 billion loan from the International Monetary Fund, the country has chosen to discourage the usage of cryptocurrencies.
The announcement came after Banco Galicia and Burbank SAU, Argentina’s two largest private banks by market value, stated that their users would be able to buy cryptocurrency ( Bitcoin, Ethereum, etc.).
To preserve its financial sector, the country is required by the agreement to discourage the usage of cryptocurrencies. Argentina’s commitments to the IMF deal are outlined in the letter of intent, which states:
“To further safeguard financial stability, we are taking important steps to (i) discourage the use of crypto-currencies with a view to preventing money laundering, informality, and disintermediation,” to strengthen the country’s financial resilience.”
The institution Banco Central de la República Argentina indicated that crypto could be utilised by criminals for money laundering and terrorism financing.They (criminals or bad actors) can also utilise them in drug trafficking, weapon funding, prostitution, and other activities because they are considered untraceable.
However, according to Chainalysis, a blockchain monitoring business, money laundering accounted for only 0.05 percent of total crypto transaction volume in 2021. This equates to $33 billion in financial fraud since 2017. In comparison, the UN Office on Drugs and Crime estimates that $800 billion to $2 trillion in fiat currency is laundered each year, accounting for around 5% of global GDP.
The report of 2021 of Chainalysis stated that Argentina placed number 10 with the greatest crypto adoption rates in the world.
With this brave step of banning crypto services, Argentina’s government is seeking to keep its population distant from storing their money in crypto assets like Bitcoin, Ethereum, and stablecoins because they find the digital assets a threat to their country’s economic structure.
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