Cryto Adoption Continues in Argentina Despite Ban on Bank-Backed Services
In a move that has halted mainstream adoption, the Argentine central bank’s (BCRA) statement restricting banks from offering crypto services has done little to deter users. In fact, cryptocurrency usage is continuing to grow in the country driven by a need to protect against inflation.
Growing Adoption Despite Regulatory Hurdles
Just days before the BCRA announcement, Argentina’s largest private bank, Banco Galicia, and digital bank Brubank announced plans to offer their business customers the possibility to invest in Bitcoin, Ether, or USDC. The move was based on an internal survey that showed more than 60% of clients wanted to add these assets to their investment portfolio.
However, with the ban in place, the future of these services remains uncertain. Marcos Zocaro, a board member of local association Bitcoin Argentina, described the ban as “a blow to the mass adoption of these assets”. Despite this, Zocaro is confident that cryptocurrency adoption will continue to grow rapidly in Argentina.
Factors Driving Cryptocurrency Adoption
- Inflation: Argentina’s high inflation rate of around 60% has made cryptocurrencies a viable option for people to protect their savings.
- Financial Instability: Over half of Argentines use crypto-assets to safeguard their wealth, with many turning to them as an alternative to traditional banking services that are often restricted.
- Exchange Restrictions: The country’s exchange restrictions and obstacles to sending and receiving foreign currency have also contributed to the growing popularity of cryptocurrencies.
Regulatory Environment Remains Unclear
Despite the growth in cryptocurrency adoption, Argentina’s regulatory environment remains far from ideal. The Income Tax Law mentions digital currencies but without providing a definition of such a concept, leaving many exchanges uncertain about their tax obligations.
The government has also expressed its intention to discourage the use of cryptocurrencies, citing concerns over money laundering and disintermediation. This move has been seen as a departure from Argentina’s initial crypto-friendly approach.
Uncertainty Ahead
As the regulatory landscape in Argentina continues to evolve, it remains to be seen how cryptocurrency adoption will unfold in the country. With the ban on bank-backed services still in place, many users are left to navigate a complex and often confusing environment.
However, for those who have already adopted cryptocurrencies as a means of protecting their wealth, there is a sense of optimism that regulation will eventually come to the space. “We believe regulation will be a matter of time, and when it happens, we’ll be ready to engage,” said Banco Galicia.