The Central Bank of Argentina has issued a noteworthy declaration to put an end to the use of cryptocurrencies in payment applications. The decision was based on concerns over the hazards connected with digital assets and their probable effect on the financial stability of the nation.
On May 4th, Thursday, the Central Bank released a statement instructing payment providers to stop integrating cryptocurrencies such as Bitcoin and Ethereum into their systems. The ruling affects all payment and electronic money transfer providers functioning in Argentina.
This decision unites payment fintech and financial institutions under the same regulations in the nation since cryptocurrencies are not regulated in Argentina. As a result, all coins and tokens are subject to this ruling.
Impacts of Argentina Economy
Argentina, one of the most significant economies within Latin America, is facing one of the world’s highest inflation rates, which surpassed 100% last month for the first time in thirty years.
Argentina is witnessing a surge in the use of cryptocurrencies, despite the absence of regulatory frameworks in the country. According to Chainalysis, a blockchain analytics company, Argentina has secured the thirteenth position on its 2022 Global Crypto Adoption Index, indicating that it is among the rapidly growing markets for digital assets.
In 2018, the capital city of Buenos Aires hosted the LaBitConf conference, which saw the participation of some of the most notable personalities in the crypto industry, including Michael Saylor, the CEO of MicroStrategy, and Vitalik Buterin, the co-founder of Ethereum. This event served as a platform to showcase Argentina’s growing influence in the expanding cryptocurrency ecosystem.
The surge in crypto adoption in Argentina is attributed to the country’s hyperinflation. Bitcoin surged to a new record high in April, as its exchange rate against the Argentine peso (ARS) surpassed 6.59 million ARS. This corresponded to a year-to-date increase of more than 100%.
Meanwhile, the inflation rate in the country has also continued to rise, reaching 104.3% in March after a 102.5% rise in February, according to data from the national statistics office.