The Central Bank of Argentina has announced that it will forbid the use of cryptocurrencies for payments through payment apps. The central bank based its decision on the risks associated with virtual assets and their potentially harmful impact on the financial stability of Argentina.

As per its official statement, the bank instructed payment providers to suspend the inclusion of cryptocurrencies such as Bitcoin and Ethereum in their platforms. The instruction applies to all payment and electronic money transfer providers operating in Argentina, including Mercado Pago. The measure ordered by the central bank aims to mitigate the risks that operations with these assets could generate for users of financial services and the national payment system.

According to cryptopolitan. com, the impact of these measures on the local crypto environment is unknown. Moreover, local media reports that payment providers refused to comment on the decision and that Argentina’s fintech chamber requested the government to reconsider the mesure as it limits access to a technology that can provide several benefits and opportunities for the local society.

In May 2021, the Central Bank and the National Securities Commission (CNV) published an alert in order to provide information on possible implications and risks that crypto assets may bring, as well as recommend a prudent attitude in order to minimise a possible source of vulnerability for users and investors. The decision’s impact on the local economy Cryptopolitan. com further details that Argentina, which is the third largest economy in Latin America, is currently struggling with one of the worst inflation rates in the world, which even surpassed 100% for the first time in three decades.

In this context, several crypto startups in the country, have suggested Bitcoin as a potential solution for ordinary Argentinians who cannot save or are struggling financially due to the current state of the peso. According to the 2022 Global Crypto Adoption Index by Chainalysis, Argentina made it to number 13 and distinguished itself as a fast-growing cryptocurrency market even though cryptocurrencies are unregulated in the South American country. According to beincrypto.

com, in December 2022, the Argentinian province of San Luis has passed a bill allowing it to issue a dollar-pegged stablecoin. The new law will also give local artists the chance to have their work minted as NFTs.  Named ‘Financial Innovation for Investment and Social Economic Development,’ the bill represents the region’s step forward towards digitalisation, and its primary goal is to leverage the benefits of blockchain and support financial inclusion.

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