- The Central Bank of Argentina has banned financial institutions from offering services that involve cryptocurrencies like Bitcoin.
- The ban comes days after Argentina’s largest private bank announced it would offer such services to its customers.
- A warning issued by the central bank last year showed its reluctance towards cryptocurrencies, which is also reflected in today’s ban.
The Central Bank of Argentina (BCRA) said in a statement Thursday that the country’s financial institutions are banned from offering services that involve bitcoin or other cryptocurrencies to customers.
The news follows a $45 billion International Monetary Fund (IMF) lending approval for Argentina in March, which stipulated that the country should ban the use of bitcoin and cryptocurrency.
Argentina’s largest private bank announced days ago that it would be offering precisely these products. Burbank, a digital bank in the country, also announced that it will support Bitcoin and other cryptocurrencies.
The shock of this decision by centralized authorities directly belies the actions of many Argentines, as the country allegedly ranks tenth in the world for cryptocurrency adoption, according to a report by chain analytics firm Chanalysis.
The continued adoption of Bitcoin and other cryptocurrencies in Argentina is largely attributed to the huge rates of inflation that citizens are suffering. Reuters reported that inflation data provided by the government last month showed annual inflation rates of 55% for the month. The report also says that experts expect inflation to hit 60% for the year, which will take its toll on the nearly 40% of the population reportedly living in poverty.
BCRA last year issued a warning regarding the use of cryptocurrencies and the risks they saw associated with participation in the asset class, including high volatility, money laundering, terrorist financing and potential non-compliance with foreign exchange regulations.