- Argentina’s central bank has banned financial institutions from offering services involving cryptocurrencies like bitcoin.
- The ban comes days after Argentina’s largest private bank announced it would start offering such services to its customers.
- A warning issued by the central bank last year showed its reluctance towards cryptocurrencies, also on display in today’s ban.
The Central Bank of the Argentine Republic (BCRA) announced in a statement on Thursday that financial institutions in the country are prohibited from offering their customers services involving Bitcoin or other cryptocurrencies.
The news follows the approval of a $45 billion loan from the International Monetary Fund (IMF) for Argentina in March, which stipulated that the country should discourage the use of bitcoin and cryptocurrency.
A few days ago, Argentina’s largest private bank announced that it would start offering these same products. Burbank, a digital bank in the country, also announced that it would offer a support line for bitcoin and other cryptocurrencies.
The shock of this move by centralized authorities directly refutes the actions of many Argentines, as the country is said to be ranked tenth in the world for cryptocurrency adoption, according to a report by on-chain analytics firm Chanalysis.
The continued adoption of bitcoin and other cryptocurrencies in Argentina is largely attributed to the high rates of inflation experienced by citizens. Reuters reported that inflation data provided by the government last month showed annual inflation rates of 55% for the month. The report also says experts predict inflation of 60% for the year, which is expected to weigh on the nearly 40% of the population who would live below poverty.
The BCRA issued an alert last year regarding the use of cryptocurrencies and the risks associated with participating in the asset class, including high volatility, money laundering, terrorist financing and non-compliance. -potential compliance with foreign exchange regulations.