A new set of restrictions were introduced by the Argentinian Central Bank that has a direct impact on citizens and companies that bought crypto in order to use it as a hedge against the high inflation in the country. As per the new rules, the bank will check the activity of individuals and companies for 90 days prior before allowing them to buy US dollars at the official rate. Their aim is to prevent an increase in the exchange rate.
Keeping the exchange rate in the control
The goal of the Argentinian government is to put a stop to the rise in the price of the blue dollar in the informal markets in the country, which happened a few weeks ago. Therefore, a resolution has been issued by the Argentinian Central Bank according to which companies and individuals who have bought cryptocurrencies will not be allowed to use access to the US dollar at its official rate.
According to the communication, only those people will be permitted to the dollar at its official rate who have not paid funds, whether in local currency or assets, to any individual or legal person whether resident or non-resident, for purchasing crypto assets. In order to make purchases in the official market, the cryptocurrencies should have been purchased before 90 days of the restrictions coming into effect.
Local sources said that the new rules had been introduced for closing the loopholes that are often exploited by organizations in order to benefit from the exchange control channels. They accomplish this by using the official rate of the dollar to buy cryptocurrencies and then sell these assets at a higher price.
A new restriction that was introduced by the Argentinian central bank was to impose a ban on buyers who buy these dollars to engage in any crypto purchases for about 90 days in order to avoid the situation mentioned above.
The people in the country mostly had negative reactions to these new rules and some went as far as questioning their effectiveness. The logic behind these new measures also received criticism. According to an economist, this measure is discretionary and arbitrary. He said that it was not apparent as to why the exchange market could not be accessed by someone who has bought some merchandise, which is exactly what cryptocurrencies are.
The measure was put into effect on July 22nd and it has already driven a number of Argentinians away from traditional exchanges. They have made the switch to peer-to-peer exchanges because these do not require them to inform about transactions and they can stay private between the two parties that are conducting them. There do not have to be any disclosures about these transactions.
Crypto use in Argentina has surged significantly, primarily because inflation has become a major problem for the citizens and they are willing to use any alternative to protect themselves from its disastrous consequences. Cryptocurrencies give them an alternative to do so, which has attracted the attention of the monetary authority.