Argentina's central bank blocks financial institutions from offering crypto

Argentina's central bank (BCRA) announced today that financial institutions cannot enable their clients to carry out operations using digital assets, just days after two banks said they had opened up crypto trading to their clients. 

On May 2, the major private bank Banco Galicia and all-digital Brubank both announced they would offer crypto trading to customers through the investment portals on their websites. But now, the central bank said that financial entities in the country cannot allow this kind of service since crypto assets are not regulated. 

Argentina's central bank defines digital assets as "a digital representation of value or rights that are transferred and stored electronically using Distributed Ledger Technology (DLT) or other similar technology.”

"The measure ordered by the Board of Directors of the BCRA seeks to mitigate the risks associated with operations with these assets that could be generated for users of financial services, and for the financial system as a whole," the central bank statement reads.

Some Argentines have embraced crypto as a way to more easily save money while dealing with the country's high inflation rate, as well as the currency controls reinstated by its current president, Alberto Fernández, in 2019.  

But in March, Argentina's government signaled that it will discourage the use of cryptocurrencies as part of a nearly $45 billion debt restructuring deal with the International Monetary Fund (IMF). In a March 3 memorandum, the government said it would take steps to "discourage the use of cryptocurrencies with a view to preventing money laundering, informality, and disintermediation," in addition to other measures aimed at strengthening the country's financial resilience.