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Central Bank of Argentina Clamps Down on Credit Card Bitcoin Buys

The monetary situation in Argentina isn’t pretty right now, and related tightening efforts in the country are intensifying. This week, the nation’s central bank issued a series of new domestic restrictions on credit cards, one of which was to ban their ability to facilitate purchases of bitcoin and other cryptocurrencies.

The restrictions come as part of a growing campaign by the Central Bank of Argentina (BCA) to defend the Argentine peso (ARS) and thus the institution’s own currency reserves to avoid a catastrophic default.

Argentina

The bank’s latest credit card limitations clamped down on a range of use cases, including ones pertaining to online gambling, buying preloaded payments cards, sending money to foreign investment firms, and forex & cryptocurrency purchases.

On the point of digital assets, the bank specifically said:

“Acquisition of Bitcoin and cryptocurrencies: It is prohibited to purchase BTC with [credit cards]. The only remaining alternative for this investment is to do so with funds transferred from a bank account.”

Taken together, the latest restrictions have the cumulative effect of making it that much harder for Argentine citizens to flee from the peso to stronger stores of value, like the U.S. dollar.

Notably, the episode marks one of the first times a central bank has taken direct action against cryptocurrencies on the grounds that these assets can undermine its institutional power, a reality that is something of an afterthought in the cryptoeconomy but that such institutions have seemingly been slow to recognize or seriously consider in the past

On the Heels of More Capital Controls

Argentina vaulted in the cryptocurrency ecosystem’s attention back in September when the BCA implemented capital controls that forbid Argentinians from buying more than $10,000 U.S. dollars per month.

In kind, stakeholders in the space wasted no time in pointing to permissionless cryptocurrencies like bitcoin and ether (ETH) as a more just and sensible foil to government-backed money. As such, Argentina’s currency crisis has driven increased awareness around neutral money, both within the country’s borders and beyond.

“[It’s] why something like bitcoin is important … No one can decide whether one person can receive money or send it,” Human Rights Foundation chief strategy officer Alex Gladstein has relatedly argued before.

To be sure, the first wave of capital controls proved immediately unpopular with locals, as the limitation made it considerably more difficult for citizens to move their money out of the domestic economy. And who wouldn’t want to? The Argentine peso experienced a massive intraday selloff earlier this year, which axed peoples’ savings in a matter of hours.

With confidence in the currency shaken, further selloffs seem possible though not if the nation’s central bank has anything to say about it. This week, the BCA doubled down on its capital controls by lowering the restriction from $10,000 U.S. dollars per month to just $200, a decrease of 1,900 percent.

In other words, Argentina’s top monetary authority really doesn’t want its citizens to use their own money freely at present, because if they used their own money freely the peso’s cratering could worsen, which would further dry up the BCA’s currency reserves and push the institution toward insolvency.

Will Argentinians stop buying dollars, though? No. A few dollars are better than none for locals right now, and some citizens will turn to black market dealers to buy heavily marked up dollars because at least they don’t have to ask anyone’s permission to do that.

Others may find a savior in decentralized finance, where stablecoins like Dai on Ethereum can provide Argentinians with a reliable and relatively easy way to store their value, all without having to resort to expensive black market transactions.

The post Central Bank of Argentina Clamps Down on Credit Card Bitcoin Buys appeared first on Blockonomi.



Source: Central Bank of Argentina Clamps Down on Credit Card Bitcoin Buys

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