Argentina's central bank, the Banco Central de la República Argentina (BCRA), is reportedly in discussions to remove its 2022 prohibition on crypto trading and custody services in banks. The potential policy reversal will lift restrictions that barred banks from engaging with crypto assets, including Bitcoin and stablecoins, on behalf of clients.
The BCRA’s ban, which prohibited financial institutions from facilitating any client digital asset transactions aside from stablecoins, was supposedly due to a policy influenced by the International Monetary Fund (IMF). At the time, the central bank cited the need to prevent money laundering, keep its financial stability, and halt unregulated transactions.
Argentina is arguably a very welcoming environment for cryptos. However, after the country secured a $44 billion bailout from the IMF in 2017, policymakers yielded to the United Nations financier’s request to shun Bitcoin from banks.
Argentina's Potential Revision of IMF Restructuring Plan
In 2022, the IMF approved a debt restructuring deal that included a commitment to “discourage the use of cryptocurrencies with a view to preventing money laundering, informality and disintermediation,” according to correspondence sent to IMF Managing Director Kristalina Georgieva.
The regulatory approach limited formal access to digital assets, leaving millions of Argentines reliant on informal channels for crypto trading. Despite the ban, some private banks like Banco Galicia, Argentina’s largest private bank, added crypto trading services.
If the rule change is successful, allowing regulated banks to facilitate crypto transactions could give citizens a safer, more structured way to invest, and the central bank will have greater oversight of market activity.
Argentines believe digital assets Bitcoin and stablecoins are the answer to high inflation rates and strict foreign currency controls. Argentina’s inflation rate came down slightly in October, falling to 31.3% from the previous month’s 31.8% level.
During the central bank decision to restrict dollar resales for 90 days prior to the October 26 elections, local trading platform Ripio reported a 40% weekly surge in stablecoin-to-peso transactions.
“Stablecoins are undoubtedly a vehicle to get cheaper dollars,” said Julián Colombo, country manager at Bitso. He also mentioned regulatory gaps that have allowed the informal “rulo” trading system to thrive, where stablecoins are exchanged for pesos at favorable rates.
Nicole Connor, leader of Argentina’s Women in Crypto organization, said many citizens now avoid peso-based savings altogether. “Inflation and political uncertainty make us more conservative, so I don’t have any savings or investments in pesos. I keep my savings in crypto and stablecoins and try to generate returns with them,” she added.
Crypto's Role in Easing Economic Pressure on Argentine Banks
According to Bloomberg, private banks in Argentina reported losses during the third quarter against the backdrop of the highest loan delinquencies seen in the last 15 years.
“A very tight monetary policy characterized by unsustainably high real interest rates and historic reserve requirements ahead of the elections had a severe impact on economic activity and particularly the entire banking sector,” said Julio Patricio Supervielle, CEO of Banco Supervielle SA.
Persistent inflation has eroded purchasing power for average Argentines, including public employees, informal workers, and pensioners, whose incomes are well below early 2023 levels. If the BCRA decides to greenlight crypto trading for traditional banks, there could be more liquidity in US dollars for the country to bargain with, not to mention more ways for President Javier Milei to fight inflation.
“The dollar occupies a very strong place in Argentine society and in everyday life because it has given us a refuge from the national currency,” one stockbroker told Bloomberg.
The October midterm election results highly favored President Javier Milei’s coalition and provided a strong market signal. Yet, the government still has to secure more dollars to rebuild foreign currency reserves and keep the peso within a trading band through a gradual depreciation of about 1% per month until the 2027 presidential elections.
London-based ProMeritum, a credit and fixed-income fund, posted a 1.76% gain in October after purchasing Argentine assets following a September sell-off. “We did not have any Argentina exposure before the September elections in the province of Buenos Aires, so avoided the negative impact,” said managing partner Pavel Mamai.