Argentinean senators just approved a $45 billion bailout deal with the International Monetary Fund (IMF) on Thursday that will help the country avoid an imminent default on its debts.
But that’s not the unusual part of the agreement.
The deal, which was approved in a 56 to 13 vote, includes a wild provision that will force the government of President Alberto Fernández to take a tough anti-cryptocurrency stance.
The clause was included in a letter of intent signed by Economy Minister Martín Guzmán and central bank president Miguel Pesce on March 3. It detailed Argentina’s efforts “to discourage the use of cryptocurrencies with a view to preventing money laundering, informality, and disintermediation” in order to “to further safeguard financial stability.”
Argentina’s anti–money laundering regulator, the Unidad de Información Financiera (UFI) or Financial Information Unit, is taking action as a result, working to add cryptocurrency service providers to its list of entities subject to reporting customer transactions, the Buenos Aires Times reported this week.
The deal still needs to be approved by the IMF’s executive board, but if it goes through, Argentina will have secured a payment-postponing grace period through 2026 and will immediately receive roughly $9.8 billion in the country’s 22nd agreement with the fund.
That’s good news because Argentina was staring down a $2.8 billion payment due to the IMF by March 22, and a total of $39 billion in debt payments through 2023.
Argentina’s precarious situation
Argentina saw its annual inflation rate rise to a whopping 52.3% in February, and banks including JPMorgan Chase are forecasting consumer prices will increase more than 60% in 2022 as global commodity inflation hits home.
"The rise in the price of commodities worldwide adds more fuel to the fire,” Isaías Marini, an economist at consulting firm Econviews, told Reuters. “The figure for March will probably be even higher than that for February.”
In a speech to the senate this week, Economy Minister Guzmán said the deal will enable the country to avoid “a profound monetary and inflationary stress that would derail Argentina’s economic recovery and have consequences on poverty,” Al Jazeera reported.
While many Argentinean senators applauded the move to secure financing, some have decried the economic strings attached. The IMF deal will not only require a tough stance on cryptocurrencies, but will also force a reduction in government deficits, an increase in interest rates, and significant cuts to energy subsidies.
Vice President Cristina Fernández de Kirchner and a left-wing coalition of senators published a letter titled “Los Muertos no pagan las deudas” or “the dead don’t pay their debts” in a sharp rebuke against the deal on Thursday.
Argentina’s rising inflation rate hasn’t only caused the country to seek financing from the IMF, it’s also led to a surge in users for crypto firms in the nation as consumers look to protect their paychecks. Two of the top crypto exchanges in the country, Lemon Cash and Ripio, boast millions of active users and have recently expanded their offerings of crypto credit cards that offer cash back in Bitcoin.
This story was originally featured on Fortune.com