As we have mentioned throughout this last year, the topic of virtual assets has been the object of analysis both by the actors involved in this sector, as well as by public opinion in general due to its great boom and adoption. In Argentina, part of this interest can be explained as well mentioned by the great adoption of virtual assets that the South American country registers, where there are more than two million accounts open in Virtual Asset Service Providers, according to the Argentine Chamber of Fintech that ensures that to this must also be added the accounts opened by Argentines in foreign providers, as well as the transactions between peers (known as “P2P”), which are carried out outside of national or foreign providers.
It is an area that has flourished and evolved without the existence of a specific regulatory framework. However, given that the beginning of an imminent regulatory process at both regional and global level has been observed, the Argentine Chamber of Fintech has shared with Cointelegraph en Español, its proposal for a series of different minimum guidelines based on the best regulatory practices at the international level and on the recommendations of the group of which Argentina is a member, the Financial Action Task Force (FATF), which They should be incorporated into a national law, in the event that it is decided to advance in a regulation in the South American country.
“The evolution of blockchain technology and virtual assets places us at a foundational point, which will modify the paradigm of the exchange of value. The current moment can be compared with the irruption of the steam engine at the end of the 18th century, or that of electricity and the automobile at the beginning of the 20th century, or the internet in the mid-90s, or the appearance of smartphones in the late 2000s. Neither event was perceived at the time. The impact of blockchain will have a similar journey, but with a much higher adoption speed “, expressed by the Argentine Chamber of Fintech in a working document, where it sets out the following guidelines to consider in order to find a balance that creates the necessary conditions to attract investment to the country, while developing and retaining the necessary talent for this objective :
1. Recognition of Virtual Asset Service Providers as obligated subjects before the Financial Information Unit (UIF): This would make it possible to adapt the local framework to the recommendations of the FATF, implying for suppliers, among other obligations: to assess the risks to which they are exposed; have a compliance structure; establish prevention and control measures; monitor operations and transactions; report operations to the FIU; and implement a PLAFT system.
2. Definitions of Virtual Assets and Virtual Asset Providers: the document proposes definitions for each of these concepts. In this sense, it highlights the importance that the definitions adopted by the regulation must be based on concepts broad enough to cover the new technologies that arise permanently, as well as the activities and services related to them (marketing, management of payments, custody, among others).
3. Express recognition of the legality of the virtual assets industry, of the right to bankarization and not to criminalize the activity: The regulation must expressly establish the legality of the virtual asset industry throughout the country. Likewise, the right of all persons who carry out the activities included in the regulation, to be able to open accounts in legal tender in financial entities authorized by the Central Bank of the Argentine Republic must be recognized.
4. Registration scheme for Virtual Asset Service Providers: Experience has shown that establishing an authorization or similar regime implies an obstacle to the development of the ecosystem and encourages the expatriation of PSAVs to other jurisdictions, impacting on investments, financial inclusion and economic development.
5. Regime for the promotion of the Knowledge Economy Law (LEC): In a climate of growing competition between the different countries for talent and investments in this sector, it is essential to create an incentive regime that acquires the status of State policy. For this, it is recommended to include the activities, services and technologies related to virtual assets within the promotion regime established by Law 27.506 (LEC).
6. Duty of confidentiality: The regulation must establish that the subjects that intervene in operations with virtual assets, as well as the members of the administration and control bodies and their personnel, will be obliged to keep secrecy about the operations that they carry out on behalf of third parties, as well as about the identity of these, with some specific exceptions comparable to those that apply to bank secrecy in our country.
7. Irreversibility of operations with virtual assets: Due to the nature of the technology and the characteristics of this type of operation, it is impossible to reverse an operation once it has been executed. The regulation should enshrine this principle, since a contrary position would imply completely denaturing the use of this technology.
“In general terms, we believe that a regulation that hinders, limits or disproportionately increases the cost of the activity of local Virtual Asset Service Providers, will not impact on the growth of the volume of operations, and will promote the exchange of Virtual Assets on foreign platforms, or P2P. At the same time, for the same reasons, this is the only possible method to facilitate the implementation of the recommendations made by the FATF, which will shortly evaluate the country, including the effective implementation of those recommendations ”, they pointed out.
“As we repeatedly state, dialogue and collaboration between the public sector and actors linked to blockchain and, in particular, virtual assets are the key to achieving a regulation that guarantees security and, at the same time, generates the space necessary to promote innovation ”, The Argentine Chamber of Fintech concluded that it was willing to offer support and participation in the implementation of these processes, which it qualified as “Central to the future of our country.”
About the Argentine Chamber of Fintech
The Argentine Chamber of Fintech was created in November 2017 by 13 founding companies, with the aim of leading the transformation process of the financial services industry, turning the country into a benchmark center for innovation and financial inclusion at the regional and international level. .
Currently, it brings together more than 200 companies that employ around 20,000 people and its focus is the robust development of the industry, through dialogue between the private, public and academic sectors.
It may interest you: