• The government of Argentina is looking to create a regulatory framework for crypto firms, which will be overseen by the country’s National Securities Commission.
• The regulation may include proof of solvency and could go into effect following a Congressional vote.
• Crypto exchanges, rather than tokens, will be subject to the new rules due to high inflation in Argentina and last year’s collapse of FTX.
Government of Argentina Considering Regulatory Framework for Crypto Companies
The government of Argentina is looking to develop a regulatory framework for crypto companies, which will define oversight and jurisdiction. The National Securities Commission (CNV) is expected to have oversight of these firms following a Congressional vote.
Requirements for Crypto Companies
According to Bloomberg, the CNV is planning to launch requirements for crypto companies that may include proof of solvency. This would come after approval from Congress on reform in its money laundering prevention law, which would give the NSC jurisdiction over digital asset service providers.
Focus on Exchanges Rather Than Tokens
CNV President Sebastian Negri has stated that the upcoming regulations will focus on crypto exchanges, not tokens. After discussion with industry representatives, it will be decided if proof of solvency should be demanded from crypto firms or not.
High Inflation and Collapse of FTX Lead To Regulations
Argentina’s high inflation rate coupled with strict currency controls have made cryptocurrencies an increasingly popular choice among its citizens. Furthermore, last year saw the collapse of FTX leading to bank runs on local crypto exchanges and withdrawals amounting up to 25% in some cases. This has caused Argentine regulators to consider putting capital market-like restrictions on crypto firms through this new regulation when approved by Congress.
Conclusion
These potential regulations are likely motivated by both high inflation in Argentina as well as increased trust issues after last year’s collapse of FTX. The National Securities Commission awaits congressional approval before enforcing these regulations on all types of digital asset service providers operating within the country’s borders.