UPDATE 04/10/23
Despite the fact that the below original article is valid, we’d like to approach some issues for a better comprehension of the Argentine landscape where crypto debates will develop.
Politics
One of the three presidential candidates with high chances to succeed announced (with scarce detail) the launch of a fiduciary digital currency (CBDC). A quite surprising announcement given he belongs to the governing party and is the current Minister of Economy. Some news media were informed that a bill would be sent to Congress, but no further information is available to-date.
An interesting survey published by BeInCrypto and relieved by Bitso reflects electors’ preference by cryptoassets segmented by political parties. Surprisingly, 20% of people embracing cryptoassets is over 65 years old. As expected, Milei’s followers are at the forefront of crypto preference; Massa’s followers in second place. For further information, enter the link above.
Adoption
Once again, we stress the fact that non-inflationary assets are seen as a hedge against inflation (rapidly growing in Argentina). In spite of their volatility, cryptocurrencies prove to be a safeguard (mostly limited issuance cryptocurrencies) given the inflationary process undergone by the main currencies worldwide.
This report on crypto adoption published by Chainalysis shows the recovery index after FTX collapse and a ranking of those countries with higher crypto adoption globally. In the LatAm region, we can mention Brazil (9th.), Argentina (15th.) and Mexico (17th.) Three Latin American nations in the top20 is quite positive and this market share cannot be compared to any other market. The case of Mexico is quite surprisingly with a very low inflation and a strong currency. We can conclude that crypto adoption is leading the way in emerging and unstable economies.
Opportunities and Investments
Now, we wonder how crypto usage works in Argentina. Let’s see some examples:
In a country like Argentina with different exchange rates and financial turmoil, one of the most profitable activities is the financial arbitrage (also called “rulo” in some cases). Arbitrage is an investing mechanism whereby people aim to profit from varying prices for the same asset in different markets, buying cheap and selling at a higher price. The crypto market is ideal for this type of investment involving lower risks due to the speedy transactions (the asset passes from hands to hands in a short term, minimizing the possibility of price variation). Arbitrage also contributes to keep uniform assets’ prices in the different markets and exchanges (because someone will always be ready to buy or sell to make a difference, if any). For further details we recommend this article.
Let’s see other investment options analyzing crypto evolution versus traditional instruments like time or fixed deposits. While in times of bull markets and high volatility, high returns can be obtained in crypto, in times of crypto market downturns or stability, coupled with high interest rates in the traditional sector, time deposits (even in pesos) can offer better returns. We recommend this article to understand how people invested in Argentina in 2023.
ORIGINAL ARTICLE
CRYPTO LEGISLATION IN ARGENTINA: The position of the CNV
According to estimations of the CNV (National Securities Commission), there are 10 million crypto accounts in Argentina. Although this may be a tricky estimation because one individual can hold several crypto accounts with different providers (or even with the same one), crypto adoption is quite relevant, especially considering the value of these assets in hard currency.
The growing crypto adoption in Argentina (Argentina holds the second place all over the LatAm region behind Brazil) enables us to foresee some crypto legislation before the new bull market (after the presidential elections). However, no suitable bill for the crypto ecosystem can be seen in the horizon. This issue has been previously covered in this article, further updated with our post on Bills at the Halfway Point.
As reported by BeInCrypto, the Legislative Branch is constantly debating crypto legislation, but no regulatory framework has succeeded in being applied to-date (as reported in this article).
At the time of writing this article, the Senate is debating the reform to the Money-Laundering Prevention Law (already passed in the Lower House). Regarding this bill and its impact on cryptoassets, we stick to the position of Bitcoin Argentina NGO as shown in this link.
As previously commented in other posts, the Memorandum of Understanding signed between Argentina and the International Monetary Fund (IMF) in March 2022 demands from the Argentine government -among other things- to discourage crypto usage all over the national territory. The bill currently being discussed is in line with this position.
Statements made by CNV’s authorities are quite relevant since this agency is likely to play a key role in crypto regulation having jurisdiction over virtual assets service providers, among other functions.
Regretfully, government authorities are reluctant to the crypto environment making improper statements invoking misleading advertising by crypto projects and/or underestimating the intelligence and/or education of potential investors. The bill and the position of the CNV is to apply the rule “same risk, same regulation” aiming to equalize cryptocurrencies to other financial instruments. The CNV together with the BCRA (Central Bank of the Argentine Republic) and the UIF (Financial Information Unit) will play a key role in crypto regulation even if the bill fails to be passed. And, finally, we’d like to point out that CNV authorities are political positions likely to change with the new administration of Javier Milei.
In spite of the reluctancy to the crypto industry, Bitcoin futures contracts can be traded in Argentina since July 2023 (first LatAm market and third worldwide). As reported by BeInCrypto, regulation of Bitcoin futures became effective on April 10, 2023, pursuant to a CNV Resolution.
At this first stage, only “qualified investors” shall have access to BTC futures market (as opposed to BTC that has no restrictions). Other important aspect is that these contracts are traded and settled in Argentine pesos (not BTC nor dollars are received) and trade prices are calculated based on the information supplied by 11 local exchanges.
It remains to be seen the position of the CNV and other regulators (besides the National Congress) regarding cryptoassets after the elections of October 2023, once the new government takes office. The crisis in Argentina calls for urgent reaction in many sectors. The crypto industry proved to have a great potential in the last bull market and could contribute to the economy recovery.
