Argentina Orders Crypto Exchanges To File Monthly Reports
Last updated on November 1st, 2022 at 11:29 am
Crypto users in Argentina are now under more scrutiny by authorities regarding crypto holdings. This comes as the country fights to protect its monetary value.
Argentina is working towards enhancing its regulatory framework to gain more control of financial processes related to cryptocurrencies.
To achieve better regulations, the Argentina tax authority (AFIP) is asking for monthly reports on clients with accounts of crypto exchanges according to the guidelines stipulated on Form 8126.
The new regulations will be imposed on payment processing firms and non-bank institutions that provide financial services, such as crypto exchanges. The information that these firms are expected to provide includes a list of users on the platform, how funds are being used and the available balances on the exchange.
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Enhancing Crypto Regulations
This will not be the first time that Argentina is cracking the whip on cryptocurrencies. Financial firms in the county dealing with cryptocurrencies had earlier been required by the Central Bank of Argentina to give out information about their clients.
The Central Bank issued these guidelines in April and requested any information to help identify all customers with crypto asset accounts or involved in the trade or payment processes related to crypto. The regulator also asked for information on third parties who were tasked with moving crypto-related payments.
The information will be used by the authorities to check how crypto users are using the tokens and point out to tax defaulters.
Protecting The Country’s Monetary System
The Argentinian government is looking to prevent capital flight, which can devalue the country’s fiat currency. The Argentinean Peso has been rapidly depreciating and has lost around 10% in the first four months of 2021.
Citizens of Argentina who want to avoid inflation are using cryptocurrencies as a store of value. People also opt to use cryptocurrencies instead of fiat currency because of the aspect of anonymity.
However, such moves have been a threat to the Argentinean economy and the Central Bank of the country is doing everything possible to save the value of the Peso, including monitoring crypto transactions.
To minimize capital flight, the ruling party in the country has given a proposal that intends for the AFIP to take total control of the crypto sector. However, the opposing party wants the ecosystem to be co-managed by the AFIP, the Central bank and the financial market regulator, the CNV.
The use of cryptocurrencies in Argentina is one of the highest in Latin America. In the region, the country has the highest BTC trading volumes on P2P platforms and investments in DAI and stablecoins are also growing, according to a report by MakerDAO.
Argentina is not the only country seeking to use regulations on cryptocurrencies to prevent capital flight and protect its fiat currency. Iran also recently stopped the use of Bitcoin mined from abroad to maintain a balance of trade. Iran’s Rial has been depreciating similarly with the Argentinian Peso.
But the attempts at cryptocurrency regulations don’t end there. Indonesia recently announced new law to tax crypto and South Africa, Russia and Turkey have all recently joined the growing group of governments trying to persevere their power via their fiat currencies.
However, some of these regulations will take away the anonymity of the crypto sector, which may discourage further investments… which may of course be part of the plan for these governments.
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