- Argentina is yet another country in America to announce regulatory plans on Bitcoin and cryptocurrencies.
- The president of the Argentine Central Bank considers that cryptocurrency represents a danger for inexperienced investors.
- The financial institution plans to have a comprehensive digital payment system fully operational by the end of the year to reduce the use of cash.
The president of the Central Bank of the Argentine Republic (BCRA), Miguel Pesce, hinted that the issuer could regulate bitcoin operations in the country. Pesce revealed that the institution plans to develop controls to prevent novice investors from taking risks when investing in cryptocurrencies.
During a virtual financial conference on Tuesday, organized by the Argentine Institute of Finance Executives (IAEF), the president of the BCRA highlighted that they are working on developing strategies to prevent the dangers of saving in cryptocurrencies such as Bitcoin.
In addition, he indicated that apart from their use as transaction instruments, the objective is to prevent cryptocurrencies from being linked to the exchange market. “We are going to regulate the intersection of Bitcoin with the payment system and the exchange market,” Pesce said.
However, he recognized the current importance of crypto in the market. Bitcoin “was created as a substitute transaction mechanism for money where the state did not play a role,” he said.
The banking executive attacked Bitcoin saying that “it is not a financial asset because it does not underlie an asset nor can it generate any profitability.” And he added, that is why they prevent investors of low sophistication when they buy or operate with this type of assets.
Although he stated that “the Central Bank is not affected by the fact that these types of instruments can be used for transactions,” he specified that “we are concerned that they are used to obtain undue gains on unwary or unsophisticated people.”
Pesce insisted that he does not want BTC or the other cryptos to be linked to the exchange market, “because that could be very harmful to the instrument and also for the Central Bank’s regulations.”
"What we are going to regulate is the system of payments with pesos through electronic mechanisms, which is our role as regulator,"
he argued. He then explained that its very nature as a scarce and limited asset “causes its price to rise and leads to the confusion that it is a financial asset.”
Digitize the payment system but without crypto
Although it considers cryptocurrencies harmful, the Central Bank of Argentina plans to digitize its payment systems as much as possible. To achieve this, it is committed to joint work between traditional private banking and fintech companies.
Through a new cable system called “Transfers 3.0”, it seeks to promote the use of digital money. Argentina is one of the countries that uses cash the most. Cash is used in about 90% of all transactions. The bank wants to adopt a system that facilitates payments and reverses the trend to use cash.
The president of the Central Bank foresees that the Transfer 3.0 system will be fully operational in all stores and businesses through the use of QR codes and other forms of recognition.
He said the new system will help reduce the use of cash, which he considers a problem, and further formalize the economy.
On The Flipside
- Pesce sees the need to modernize the payment system, but it is not within the BCRA’s plans to have a digital currency.
- Every day more central banks around the world are joining the flow of digital money.
Why You Should Care?
Argentina is the second country in America that plans to establish controls on Bitcoin. The statements by the president of the Central Bank of Argentina, Miguel Pesce come days after the US Senate approved a series of fiscal and operational regulations on Bitcoin.