Argentina is reportedly preparing the groundwork to govern the cryptocurrency service providers through an executive order. The measure will keep the Latin American country out of the Financial Action Task Force (FATF) grey list, putting crypto service lenders under the oversight of the local securities watchdog.
According to the Argentine media, President Javier Milei will be preparing to issue an emergency decree to create a framework that would regulate the operation of these, putting it under the oversight of the national securities watchdog (CNV).
Argentina was placed on the FATF grey list from 2010 to 2014 due to its lax money laundering policies. The upcoming visit of the financial watchdog to assess the country’s money laundering countermeasure may be behind the latest government measure.
Under the new decree, all cryptocurrency service providers will have to register with the national cryptocurrency watchdog and operate under a license that will be provided by the authority even if these digital currency players are not based in the Latin American country.
Also, these ventures will have to provide information to the national intelligence unit to comply with anti-money laundering laws, forcing cryptocurrency services lenders to produce risk reports and report suspicious movements.
“Implementing such measures could lead to consolidation in the crypto environment, given that large cryptocurrency providers in the country would be able to comply with these requirements from day one. Small exchanges and peer-to-peer (P2P) markets could be forced to withdraw due to their inability to comply,” reported Bitcoin.com on the matter.
The executive order will likely come before March 2024, coinciding with the FATF visit to Argentina. Milei, known for his liberal stance and support for Bitcoin, introduced a bill translated as “Law of Foundations and Initial Measures for Argentinian Liberty” earlier in 2024. While the proposed legislation aims to alleviate taxes across various industrial sectors, it omits any provisions regarding cryptocurrencies, thereby effectively eliminating their tax declaration.
Earlier, crypto owners had the privilege of declaring their holdings, benefiting from a favourable fixed tax rate (no tax for holdings below USD 100,000 and a 15% tax for those exceeding this amount).
Critics stated that the bill pushed by Milei contradicted his “support for cryptocurrencies,” while labelling the tax policy as unfairly biased. Minister Guillermo Francis, however, pointed to a lack of consensus among political factions as the reason behind this controversial decision.
Should the proposed legislation pass, holding cryptocurrencies in Argentina will not incur taxes, said accountant Marcos Zocaro, while interacting with the CCN.Com.
“Tax obligations will arise only from capital gains generated through sales, and that too below a specific threshold. In the case of an individual, for the simple act of buying what the law calls digital currency, no tax is paid. What is taxed on profits, is the profit made from the sale and there is also a minimum below which no tax is to be paid,” the expert stated further.
As per the crypto industry insiders, international transfers of digital currencies will be subject to a tax rate ranging from 5 to 15%, a strategy designed to attract foreign investments.
The bill also proposes a provision for the declaration of cryptocurrencies without necessitating evidence of their origin.
Diana Mondino, the Argentine Minister of Foreign Affairs, stated that cryptocurrencies would continue to play a role in Argentina’s financial landscape, while following certain frameworks.
Cryptocurrencies in Argentina are known to be a potential bulwark against inflation, helping to safeguard individual earnings. Businesses also get the opportunity to have streamlined international transactions through digital currency.