Central Bank of Argentina to Set New Regulations for Digital Wallets
Key Insights
The Central Bank of Argentina is working on a new set of regulations in order to control money movement in digital wallets in the nation
Digital wallets saw an explosive boom across the nation and globally
The steps are being taken to curb a large number of frauds related to digital assets
Amid tightening regulations around the crypto market and the global crypto market cap recovering, another country took a step toward strengthening laws around digital assets.
Reportedly, the Central Bank of Argentina is working on a new set of regulations seeking to control the entirety of the digital wallets in the nation.
Targeting Digital Wallets to Curb Frauds
In recent years, digital wallets saw an explosive boom across the globe and are seemingly under the watchful eye of Argentina’s Central Bank. The bank’s board of directors is said to analyze new regulations to ‘avoid fraud.’
Notably, the Central Bank of Argentina has its sights on the use of digital wallets. As per leaks by local media organizations, this new legal framework is directed at stopping fraud said to be facilitated by these tools.
According to local media leaks, the bank has dedicated a team to produce new regulations to understand better what’s happening with the funds in digital wallets and improve their KYC measures. Regarding implementations of the laws, the bank said:
“It is not about prohibiting anything, but about applying the same rules that banks must comply with today in relation to knowing their customers.”
Already Taking Measures
According to the bank, many frauds related to digital assets and the lack of due diligence on the part of some firms have led the authorities to take necessary steps in this space.
The new regulations will allow the bank to have control over the money movement by users operating digital wallets such as Mercado Pago. Currently, Mercado Pago’s estimated users stand at 30 million.
In 2021, Argentina’s Central Bank established that digital wallet providers had to preserve 100% of the customers’ funds in their bank accounts, which shattered the companies’ opportunity to profit from investing customers’ funds.
The Central Bank has said that it is working on this new legal framework regarding digital wallets. However, the AFIP, the Argentinian Tax Authority, has already moved to confiscate the funds in the digital wallets of taxpayers with debts. As per reports, close to 10,000 taxpayers are expected to have their digital wallets seized in the coming months.
Local media houses have reported that the plans of confiscating funds could already be in the execution phase. Notably, the first confiscation has already been requested by the AFIP.
A judge authorized the institution to take control of the funds in the digital account to pay debts accumulated by the user. The state tried to seize the taxpayer’s bank accounts first, but the outcome of this action was negative.
The leaking of this new Central offensive generated a stir in the fintech sector, which fears that the new regulations will prevent them from competing on an equal footing with the rest of the financial system.
That said, the adoption of cryptocurrencies in Argentina has been growing over the years. Recently, Bitcoin’s Lightning Network-powered app Strike launched its services in the nation, further giving way to mass adoption.
This article was originally posted on FX Empire
