Por 8 septiembre, 2022 No Comments

Due to local macroeconomic factors, Argentina is not like other countries, ecosystems or markets. Even though this concept has been approached before, in this article we will develop some of the major concerns affecting the development of the FinTech market at the closing of the first half of 2022.

Informality rate

Non-registered economy is estimated around 40%-50%. depending on the surveys one consults. This has pros and cons for FinTech projects. Even though many companies (only a few) seek not to disclose the identities of their users, an increasing number of platforms require full personal data (KYC) providing transparency and safety. So, PSP (Payment Service Provider) transactions are not anonymous. As analyzed in our article on AFIP-Seizureof virtual wallets, tax authorities are increasingly focusing on non-bank accounts. Seizure procedures are affecting, for the moment, verified debtors (whether administrative or judicially verified) but, according to the evolution of the War between Banks, FinTechs and Regulatory Boards, information supplied by PSP transactions could be used proactively to detect tax inconsistencies.
FinTech companies are continuously pressed to disclose their users’ information (which they have but do not want to share) arguing that tax authorities have such data available from other sources. Therefore, apps and centralized virtual wallets are not attractive for those seeking to conceal their transactions. Cash is more unlikely to be traced (even increasingly resisted).

Banknotes’ value

Continuing with the previous item, pesos bills are increasingly worthless. Without higher denomination banknotes, devaluation and high inflation, the highest denomination bill today is worth less than 5 dollars (and the depreciation goes on). The result is that a fruitless logistic is needed for transactions in pesos cash, even with small amounts. Even though paper money is difficult to be traced, it is almost impossible to perform big transactions in pesos banknotes. This fact discourages cash as a means of payment and is gradually being replaced by other methods.

Within this context, the position of ADEBA (association representing traditional banks) has drawn our attention. They request the substitution of paper money for digital money. Their Proposal (IDDA “Proposal for Digital Money in Argentina”) is based on environmental, economic and financial reasons. The Proposal is more connected to the launching of a central bank digital currency (CDBC) and/or to the virtual representation of fiduciary currencies (FIAT) and it is quite surprising that the banks themselves are abiding by major technology and are evolving towards a new concept in money management.

QR code Payments

In spite of the informality high-rate, the adoption of digital payment methods is growing rapidly. We can find not only traditional debit and credit cards and virtual wallets transfers but also 3.0 Transfers, interoperability of accounts and QR code payments.
Consumption and cashless-payment habits, together with the benefits of these new technologies, evolve towards a more registered economy. We recommend this article published by El Cronista related to this topic.

Exchange rates

Given the variety of taxes, instruments and special regimes, there is a factual splitting of exchange rates in Argentina. Official dollars are only available for punctual cases through express authorizations.
Those seeking to save in dollars face many obstacles to purchase foreign currency through banks. For this reason, crypto currencies and stablecoins (an option to dollarize savingswhich can be purchased with pesos) turn to be quite attractive options. This fact was also reflected in this post (Crypto Bank Soap Opera) and was reported by iProUp as well.
Notwithstanding the obstacles and complications posed by these restrictions, they can represent business opportunities. With a gap over 100% between the fictitious value kept by the government and the value assigned by the market to the peso against the dollar, companies and individuals make different types of “arbitration” to choose the best exchange rate for settling their transactions. Even though not profitable, this mechanism is a legal instrument as a protection against the constant peso depreciation.

Crypto Dollar

One of the booming “new exchange rates” in the last month was the “crypto dollar”, which is the exchange rate of the peso against stablecoins, depending on the settlement system (dollar MEP or Blue Chip Swap-CCL) with a substantial difference: the crypto dollar “operates” 24 hours a day, 7 days a week.
As the crypto market is not regulated and cryptocurrencies are not subject to opening and closing hours, on weekends they operate as if it were a Monday. Value fluctuation whilst main markets are closed (MEP and CCL) is connected to speculations at opening hours of the following day. In weekends with turmoil and nervous population (like the one with the sudden exit of the Minister of Economy on a Saturday), this value can “depeg” largely from other exchange rates awaiting some news (whether good or bad). For further details, read this article published by Ámbito reporting Martín Guzmán’s leave.

Restriction to access the single free exchange market for Bitcoiners and other crypto investors

By means of Communication “A” 7552 the Central Bank (BCRA) imposes restrictions over companies and/or individuals having purchased cryptocurrencies in the last 90 days to access to the single free exchange market. A sudden announcement but not surprising at all. Effects could be quite serious for the import-export sector; foreign trade companies may be subject to blocked legal transactions for a period of 3 months. Given the current cosmovision from the government, unsound decisions can be expected.
Considering that the official dollar is “subsidized” (artificially low), it is expected that the government will prevent those who benefit from this regime from having access to other assets out of its control. That said, the lack of technical suitability of the rule arises two relevant questions: 1) how do they know if the interested party had access to the crypto market and 2) how assets held on Exchanges are considered.
Regarding the first question, it should be defined to what extent those companies engaged with crypto trading are under the scope of an information regime and what data should publish and before whom. This is a grey area due to the lack of a regulatory and legal framework. For example, PSP are regulated by the Central Bank whilst crypto trading platforms are not. Even though they are inter-connected, they can be different companies.
Regarding the second question, it is important to point out that, in centralized systems like the Exchanges, the party who holds the cryptoassets is the platform that assigns a portion thereof to the user. In this sense, whenever someone purchases cryptocurrencies in an Exchange, the investor has to transfer them to a wallet owned by him/her outside the platform as the only way “to receive cryptoassets”. The fact that a media like Cointelegraph echoes this type of information is not helpful for the local crypto environment. However, this can represent opportunities for companies seeking to operate legally and efficiently in these markets.

Money transfer

Worldwide migration hit a historical record, as reported by iProfesional, reason why money transfer became a flourishing business. Factors like inflation, devaluation and exchange restrictions together with the fact that many young people leave the country and/or work for foreign companies have converged to make Argentina a hub for projects focused on transnational transactions in an efficient and quickly way. We recommend this article published by Infobae on Argentinean workers and employees working remote for foreign companies with salaries in cryptocurrencies.

Technological Infrastructure

Even though big cities have a good connectivity and almost everyone has a device with access to a FinTech platform, the truth is the situation varies throughout the country. This can represent an additional challenge upon generating a “finance democratization” through these tools.
This is another “gap” apart from cultural, educational and economic differences. FinTech potential will require to be developed with some proposals including “hardware” equipment. This fact can represent a business opportunity for those companies engaged with this type of infrastructure services.


Argentina and its macroeconomics can become a hub for financial and technological businesses. It is important to have a detailed scheme of the needs and problems for the development of innovative and profitable solutions. From our Law Firm, we are at your disposal to advise you professionally on transforming projects for a better performance of technological platforms aiming to boost financial inclusion.

Diego J. Nunes
Estudio Nunes & Asoc.