- The international credit body’s request is part of a memorandum of understanding recently signed with the Argentine government.
- NGO ‘Bitcoin Argentina‘ has asked the government to offer an explanation for the controversial measure.
- The agreement with the IMF, which must first be ratified by Argentine Congress, has already been approved by the Chamber of Deputies.
The foreign debt refinancing agreement signed between the Argentine government and the International Monetary Fund (IMF), also contained a provision asking the Latin American country to discourage the use of cryptocurrencies. The request was included as part of a set of monetary and fiscal policy policies to which the nation is committed in order to have longer payment terms.
The provision was only made known when the agreement with the IMF was presented to the Argentine Congress for debate and approval. Bitcoin communities in Argentina reacted immediately to the shock, asking the government for an explanation of how it intends to “discourage” the use of cryptocurrencies in the country.
Argentina is one of the top 10 countries in the world in terms of the adoption and use of cryptocurrencies, according to statistics from ‘Chainalysis‘. The clause in the “Memorandum of Economic and Financial Policies”, which is part of the agreement signed with the financial institution and sent to Congress, expressly establishes the request.
“To better safeguard financial stability, we are taking measures with the aim of discouraging the use of cryptocurrencies with a view to preventing money laundering, informality, and disintermediation,” the text states.
It adds that these measures also seek to “provide more support to the current payment digitization process to improve the efficiency and costs of payment and cash management systems; and safeguard the protection of the financial consumer”.
Crypto NGO asks the Government for Explanations
Last week, NGO ‘Bitcoin Argentina‘ asked the Minister of Economy, Martín Guzmán, to provide them with access to the original text of the agreement signed with the IMF, in which the request for the application of measures against the trade of cryptocurrencies in the country was provided.
"We are convinced that the way forward is not disincentives or prohibition, but to work in a coordinated manner with the private and public sectors to take advantage of the potential of decentralized finance," said Javier Madariaga, executive director of the non-profit organization.
“We are concerned that the authorities are agreeing to discourage a technology that has already been massively adopted by the population itself instead of unlocking its potential to address historical problems,” he added.
He argued that last year only 0.15% of the operations carried out with digital assets in Argentina “were associated with some illicit activity, such as fraud or money laundering. These percentages are much lower than those presented in transactions made with fiat money.”
“Blockchain technology, which emerged with the birth of Bitcoin, is a decentralized public ledger, where anyone can access the data chain, and each transfer is recorded in a secure and verifiable way through the use of cryptography”, Madariaga underlined.
On the Flipside
- Argentina currently has the highest inflation rate in Latin America, registering at 4.7% in February, even above Venezuela, which ranks the highest annual rate in the world at 684% per year.
- The country has been subjected to a permanent and progressive process of devaluation of its national currency, the peso, against the dollar for years.
- For these reasons, many Argentinians are choosing to use and save through cryptocurrencies.
Why You Should Care
- The IMF has been encouraging member states to issue central bank digital currencies (CBDCs).
- Its managing director, Kristalina Georgieva, has said that CBDCs may become better than private cryptocurrencies such as Bitcoin, Ether, Cardano or stablecoins.
Has the IMF declared war on cryptocurrencies by conditioning the signing of debt agreements? The inclusion of this type of provision in the agreement signed with Argentina certainly suggests as much.