THE FIRST CRYPTO TRANSFER IN ARGENTINA’S FOOTBALL HISTORY

Por 12 septiembre, 2022 No Comments

Further to our article Crypto and Sports, a booming news was hailed by the crypto environment and by the sports universe as well: a first-division team of the Argentine League sold one of his football players in exchange for stablecoins. As anticipated in our article, the use of these synthetic derivatives is broadly increasing due to the potential they have.
Given the restrictions to access the foreign exchange market in Argentina, the sale with crypto turned to be much more profitable than if it were made through a traditional bank transfer (since the “crypto dollar” is worth approximately two times the official rate). We recommend this article for a better understanding of the different exchange rates in Argentina.
Based on our article Nature of Cryptocurrencies within Argentine Legal Framework, this transaction can be considered as a payment in kind of the rights over the player’s transfer. Due to the lack of proper legislation, the acquisition by the Brazilian club falls under this category; at least, until a regulatory framework comes into force.
For a detailed information on the transfer of the midfielder Giuliano Galoppo from Banfield to Sao Paulo, we recommend this article published by Forbes. If local authorities do not present any issue with the operation, this type of transaction could become a trend for all Argentine clubs seeking to transfer their football players to the foreign market, mostly if the transfer amount can be assured at a fixed price reflecting the free exchange rate (or a similar one), excluding the obligation to settle such amounts immediately at the official dollar rate (with the subsequent trouble to acquire with pesos from one transfer market to another one).
The relationship between cryptocurrencies and football in Argentina deepens rapidly. Regardless some negative experiences such as Zoe Cash, a company which offered to pay prize amounts to many players, and ended up with its developers under prosecution for fraud, we find many serious companies approaching football clubs. For instance, DeCrypto, is the main sponsor of a top-level club and Binance, partnered with the Argentine Football Association (AFA), and we find more and more crypto-projects fully committed with sports activities, as fan tokens for engagement and investment purposes continue to grow as well. In this case, Bitso, the popular crypto platform, has been elected as escrow for this operation.. For this kind of service, the company needs to have operations and be registered in both countries (Brazil and Argentina in this case).
Nobody knows if transfers like this are likely to flourish in Argentina due to tax regulators’ position in this matter. An AFIP (Federal Administration of Public Revenue) decision is expected on this issue that had such high media impact. It is to be noted that football clubs in Argentina are tax-exempt nonprofit civil entities. Tax authorities could decide to withdraw Banfield’s tax exemptions and levy it with value-added tax (VAT) and income tax with retroactive effects over all transactions of the last 6 years.
Our opinion is that the transaction performed between the clubs and the football player is legal in all aspects. It is a binding agreement to carry on a legal business with legal payment terms and conditions. In a sector suspected of under-reported contract amounts, like sports agreements, blockchain technology could lead to more transparency providing full traceability and monitoring all parties involved.

Diego J. Nunes
Socio
Estudio Nunes & Asoc.