Argentina’s dream of expanding cryptocurrency adoption threatened by new regulations, Miley’s changing rhetoric
When liberal politician Javier Millais was elected president of Argentina late last year, many in the world of traditional finance and digital assets feared that a leader who appeared to support Bitcoin would help increase cryptocurrency use in South America’s second-largest economy. I guessed it would be.
However, after the recent unveiling of new regulations requiring both companies and individuals who handle or trade digital assets to register with the government, many are wondering whether Argentina is now moving away from digital assets. A new era of reduced regulation and increased use of cryptocurrency.
Critics of the new regulations see them as adding an unnecessary layer of compliance that complicates cryptocurrency adoption rather than encouraging it.
“It seems to be the other way around when it comes to Miley’s rhetoric,” said Hernan Yellati, an Argentinian and partner at Borderless Capital. The company recently announced plans to open its Latin American headquarters in Argentina, a leader in digital asset innovation.
Let’s hope Milei paves the way for a new era
Miley’s dominance and Argentina’s financial difficulties appear to have set the stage for increased use and reform of cryptocurrencies, particularly Bitcoin. “His presidency could pave the way for: greater acceptance And the integration of cryptocurrencies into the Argentine economy offers a potential solution to long-standing problems of inflation and financial instability,” Grayscale Research said the day after Milei’s election victory.
In December, two weeks after Millais took office, Argentina announced that Bitcoin could be used as currency in official contracts, in what appears to be a government indication of its willingness to embrace digital assets. Many Argentines have turned to cryptocurrencies as an alternative as the value of the local peso has fallen.
Prime Minister Yelati said the registration rules appear to have been carried over from the previous government, but it may take time to undo them. “Even if the government continues its rhetoric of deregulation and free markets, it could take significant delays and delays to undo these particular regulations,” he told The Block. “Considering the negative impacts, we look forward to more clarity from the government in the future.”
Bitso Argentina country manager Julián Colombo downplayed the potential impact of the new regulations and the idea that Milei is a true champion of digital assets. “I don’t see the level of political significance that some media outlets are attaching to (the new regulations),” Colombo told The Block. “President Millay is not personally involved in this process, and on the campaign trail, he is not a president who currently puts cryptocurrency first.”
Bitso is a leading crypto company in Latin America. The company, founded in Mexico in 2014, said it had 8 million users as of the end of last year.
Changes in ‘rhetoric’
When Milei was elected last November, Ruslan Lienkha, head of markets at YouHodler, said he expected cryptocurrency use could eventually become “much more widespread” in Argentina under the new president. Now Lienkha says it seems like Milei might change her stance.
“There is nothing bad about the registration rule itself. But he told The Block: “This would be a possible step towards an old policy.” “We can also see a change in Melay’s rhetoric since his decision to postpone central bank elimination and dollarization.”
While many had hoped that Mailay would pave the way for increased cryptocurrency use, the new president was also expected to deliver on his promises of central bank reform and dollarization of the economy, which could lead to Argentina’s serious problems such as hyperinflation and currency depreciation. These are steps that can improve the problem. But last week, Mailay told Bloomberg that his reform plan would take longer than he had hoped.
Disclaimer: The Block is an independent media outlet delivering news, research and data. As of November 2023, Foresight Ventures is a majority investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, impactful and timely information about the cryptocurrency industry. Below are our current financial disclosures.
© 2023 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.
