Argentina, one of the G20 countries, has taken a step backward with its cryptocurrency development. The South American country has typically been supportive of allowing crypto-related activity, even instituting crypto payments to pay for public transportation. However, the Central Bank of Argentina (BCA, for its Spanish acronym) has passed down a new policy that prohibits citizens from using credit card to purchase digital currencies, Cointelegraph Brazil reported. The change came shortly after the BCA decided to limit purchases of U.S. dollars.
According to the central bank, the decision to restrict purchases of crypto, as well as of U.S. dollars, was made in order to preserve Argentina’s Foreign Exchange (Forex) reserves. The BCA wants to keep U.S. dollars out of the country in an attempt to strengthen exchange rates. It stated last week that the maximum amount of dollars that can be purchased on a monthly basis is now just $200, as opposed to the $10,000 previously allowed.
The BCA said in a published communication (translated from Spanish), “Acquisition of Bitcoin and cryptocurrencies: It is prohibited to purchase BTC with this payment method. The only remaining alternative for this investment is to do so with funds transferred from a bank account.”
Also in an effort to shore up its forex reserves, the BCA now defines “exchange rate” to include foreign currency limit and control and states that financial institutions and other local card issuers “must have the approval Central Bank prior to accessing the foreign exchange market and making payments abroad through the use of credit, debit or prepaid cards issued in the country, when such payments originate, directly or indirectly, through the use of international payment networks.”
The changes aren’t going to sit well with crypto enthusiasts, nor is it going to have the effect regulators had expected. Instead of shoring up the country’s economy, it could lead to more people turning to crypto and even looking for black market opportunities if no legitimate avenue can be found. According to a tweet by Alex Krüger, “Expect the new government to extend the capital controls as well as take over the central bank, among other things. A bitcoiner’s dystopian world is shaping up down under. Argentina’s currency black market will balloon.”
Expect the new government to extend the capital controls as well as take over the central bank, among other things.
A bitcoiner's dystopian world is shaping up down under.
Argentina's currency black market will balloon.
— Alex Krüger (@krugermacro) October 28, 2019
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