Argentina is cracking down on the digital currency industry, a new report has revealed. The South American country has seen an increase in digital currency ownership as more people abandon the inflationary local currency, the peso. Through its anti-money laundering agency, the government is seeking to tighten its financial laws in a bid to preserve its currency’s value.
Argentina’s Financial Information Unit (UIF) is pushing for tighter controls for the digital currency trading industry, according to a report by local newspaper El Cronista. The UIF believes that recent increase in the trading volume could be as a result of a rise in criminals seeking to avoid the anti-money laundering laws.
Carlos Alberto Cruz, the agency’s president, stated, “Recently, we have seen an increase in operations carried out through virtual assets. These transactions could be carried out by people who intend to circumvent international standards and avoid the anti-money laundering framework.”
Cruz has ordered digital currency exchanges to submit a wide range of data regarding their activities for review by his agency. This order extended to other financial services providers including commercial banks, credit card issuers, mutual funds, stock brokers, non-governmental organizations and insurance companies.
The latest efforts come at a time when the digital currency trading volume in Argentina has spiked. Arcane Research revealed in April that Argentinians are dumping record amounts of pesos for digital currencies. The volume has spiked by over 1,000% since the beginning of 2018. This comes after the peso recorded a high inflation rate amid accumulating debt and slow economic growth.
(1/2) Argentines are dumping record amounts of pesos for #bitcoin on @LocalBitcoins, as the government is about to default on its debt (https://t.co/rSYFq8gDSD) and the currency is suffering from inflation. (Source: @Coin_Dance) pic.twitter.com/oTFYadike4
— Arcane Research (@ArcaneResearch) April 23, 2020
Some experts in the Argentine digital currency space believe that the latest crackdown is the government’s effort to prevent the citizens from dumping more pesos for digital currencies. It could end up having grave consequences for the traders, however. As it stands, the UIF has yet to specify the metrics it will use to determine whether a digital currency transaction is illicit. The agency could end up abusing the vague legal framework to wreak havoc on traders.
Argentina becomes the latest South American country to show hostility towards the digital currency industry. Its neighbor Brazil has been notorious for its treatment of the industry. Brazil has passed regulations that have made it extremely difficult for digital currency exchanges to operate, with many smaller ones having to shut down. Those that have survived have had to contend with a hostile banking industry that shuts down bank accounts at will.
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