Argentina's fintech chamber claims the decision "threatens the progress and the free choice of citizens."
The central bank of Argentina has prohibited payment providers from facilitating crypto transactions, aiming to limit the nation's payment system exposure to digital assets.
According to the press release shared on May 4th, under the new rules, payment fintech and financial institutions will be treated the same in Argentina, with payment providers prohibited from offering or enabling crypto services through their apps.
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The central bank explained that payment service providers "may not carry out or facilitate operations with digital assets, including crypto assets, that are not regulated by the competent national authority and authorized by the Central Bank of the Argentine Republic."
Since cryptocurrencies are unregulated in Argentina, this decision applies to all coins and tokens, including Bitcoin (BTC), Ether (ETH), and Tether (USDT).
The impact of this measure on the local crypto industry remains uncertain as Argentinian payment providers have refrained from commenting on the decision.
On the other hand, Argentina's fintech chamber claimed that the authorities in the country must reconsider the decision as it "threatens the progress and the free choice of citizens who seek alternatives to protect their purchasing power in a context of accelerated inflation."
Hyperinflation in Argentina has fueled crypto adoption, with Bitcoin's price hitting an all-time high in Argentine pesos in April.
In March, the country's inflation rate surged to 104.3% annually. Consequently, the Argentine peso's value has dropped by almost 50% against the US dollar over the past year, prompting some cities to seek refuge in cryptocurrencies.
As the economic crisis continues, the Argentine province of San Luis issued its own stablecoin, pegged to the US dollar and fully collateralized by liquid financial assets. Chainalysis found that in 2022, over 30% of Argentine consumers used stablecoins for everyday purchases, primarily for small retail transactions up to $1,000.
At the beginning of 2023, Brazil and Argentina unveiled plans to launch a joint cryptocurrency.
