The Central Bank of Argentina (BCRA) is watching the development of cryptocurrencies with “concern,” said its president, Miguel Pesce.
At an event organized by the Argentine Fintech Chamber on Tuesday, Pesce said that “the name cryptocurrency is not appropriate” because the blockchain-based units of account are precisely the opposite of what a currency should be, adding that crypto “refers to something hidden, opaque,” Argentinian newspaper Clarín reported.
Pesce also discussed an official document the BCRA published with Argentina’s Securities Commission (CNV), in which the central bank expressed that cryptocurrencies are not legal tender, have high volatility, are exposed to operational disruptions and cyberattacks, and have no safeguards, among other negative characteristics.
“We believe that we have to do [the] work of education, explaining to the population what these instruments are about to avoid generating situations in which, due to misinformation, someone makes an investment over which he has no control,” Pesce said.
Cryptocurrencies were created as a payment mechanism and not as an investment instrument, said Pesce, who added that their scarcity has made these instruments to become financial and raise their prices. That scenario, he commented, gives cryptocurrencies “a very high degree of volatility,” the very characteristic a currency should not have.
“For a currency, stability is something fundamental,” said Pesce, under whose central bank management the Argentinian peso dropped in value from $0.017 to $0.010, though it trades at $0.005 in the black market.
Because of a provision issued by the BCRA in 2019, Argentines are only permitted to buy up to $200 a month in dollars through official channels, with an additional tax of 65% over the official quote. Given this scenario, stablecoin purchases on cryptocurrency exchanges have increased sixfold during 2020.
In 2019, BCRA also forced service exporters to convert their income from dollars to Argentine pesos through an exchange channel authorized by the Argentine Central Bank. To avoid the switch to Argentine pesos, many exporters receive their payments in cryptocurrencies.
Pesce said on Tuesday that even if exporters get paid in cryptocurrencies, these have to be considered as dollarized payments that need to be converted into Argentine pesos.
“This is so, it is a rule of the Central Bank,” he said. “One can receive payment in the instrument or in the goods one wants: in the same way that one can receive a payment in species, one can receive a payment in cryptocurrencies.”
Pesce added that the BCRA is controlling the use of cryptocurrencies as a way to avoid exchange regulations. “The Central Bank is going to be careful that this type of instrument is not used to circumvent exchange regulations,” he said.
The BCRA is closely monitoring crypto movements in Argentina. In June it started investigating nine fintech companies for allegedly offering unauthorized financial intermediation through cryptoassets.