Argentina’s central bank steps in to block new crypto offerings from banks

After two of Argentina’s biggest banks announced that they would open up to crypto trading, the central bank of Argentina (BCRA), has taken the bam out of financial institutions that offer crypto trading.

The BCRA stated that the move was made to reduce the risk crypto poses to users as well as “to the entire financial system,” citing crypto’s high volatility, money laundering, and lack of regulatory safeguards.

This news comes on the heels Banco Galicia (Banco Galicia) announcing Monday that their customers would be able to buy Bitcoin (BTC), Ether(ETH), USD Coins (USDC), and Ripple ($XRP).

Banco Galicia conducted a poll to determine the decision to open crypto trading. 60% of respondents indicated that they would like to have easier access to digital currencies.

Although crypto has been a topic of concern for the central bank, it issued a warning to the public last May about the risks. It warned of volatility and money laundering, despite noting that there are no signs of widespread acceptance.

Statista data analysis shows that 21% of respondents from Argentina owned or used cryptocurrency in 2021. This is the sixth highest adoption rate worldwide and the highest in the Americas.

According to INDEC, Argentina’s statistics agency, Argentina’s inflation increased 6.7% in March, which was the highest in 20 years. It reached 55.1% annually. To hedge against rising inflation, some Argentinians are turning to crypto. One rural community began mining cryptocurrency in April to combat inflation.

Related: Colombia cracks down on crypto tax avoidance as adoption flourishes

This could be due to the $44 billion extension of the International Monetary Fund’s (IMF) debt plan. A clause in which the IMF asked Argentina to “discourage cryptocurrency use” was the reason for the change in emphasis.

The central bank’s announcement is in contradiction to plans by the mayor of Argentina’s capital, Buenos Aires. Late April, Mayor Horacio Rodriguez Larreta declared plans to digitize the city. He also stated plans to offer citizens the possibility to pay their taxes in cryptocurrency.