Key facts:
Financial entities will not be able to operate with bitcoin or digital assets, the Central Bank dictated.
Banco Galicia informed its clients that it will return and compensate investments in bitcoin.
In the last hours of Thursday, May 5, the Central Bank of Argentina (BCRA) confirmed through an official provision what it had already announced hours before through a statement. The agency made official the ban on offering services with bitcoin and cryptocurrencies for regulated banks in the country.
The regulation on which the BCRA is based for this provision is that of “Complementary services of the financial activity and permitted activities”, informs the Communication “A” 7506 of 2022, aimed at financial entities.
In the statement, it is stated that “financial entities are not empowered to carry out –whatever their modality– operations other than financial intermediation” and that “they cannot carry out or facilitate their clients to carry out operations with digital assets (… ) that are not authorized by a competent national regulatory authority or by the Central Bank of the Argentine Republic (BCRA).
This restriction includes crypto assets and “those (digital assets) whose returns are determined based on the variations that they register.”
One of the main foundations of the BCRA is that The country’s financial entities have a fundamental and exclusive objective: financial intermediation. According to the regulation of “Complementary services of the financial activity and permitted activities”, banks are prohibited from “carrying out operations outside” such activity, as dictated by Title II of the Law of Financial Entities.
Among other issues, this legislation details what activities can be carried out by commercial, investment and mortgage banks, financial companies, savings and loan companies and credit unions. Such permissions include receiving deposits, granting loans, granting guarantees, facilitating common investment funds and operations in foreign currency. The law covers many other possibilities and makes it clear that it is not exclusive of other services, although it accepts the possibility of subsequent prohibitions:
Article 21. – Commercial banks may carry out all active, passive and service operations that are not prohibited by this law or by the rules that the Central Bank of the Argentine Republic dictates with objective sense in the exercise of its powers.
Financial Entities Law.
For its part, Communication “A” 7506 explains the cases of activities in the industrial, agricultural, commercial sector «and of any other non-financial nature». In all of these, banks cannot participate, both on their own account and through third parties.
What happens to the bitcoins of Banco Galicia and Brubank customers?
During the afternoon of Thursday, May 5, CriptoNoticias reported on a statement issued by the BCRA warning of this prohibition against banks. However, at that time Banco Galicia customers could still buy bitcoin through their application, as this newspaper could verify.
However, the situation changed after Communication “A” 7506, which officially informed financial entities about this prohibition. At this time, from Banco Galicia they report that the balance in cryptocurrencies can be seen but cannot be modified. Besides, they will return to their clients the invested amount and will give a compensation “because of trust” towards that entity.
With all this, it seems that the link between banks and bitcoin in Argentina came to an end – at least temporarily – in less than a week. The measures ordered by the Argentine State are consistent with the guidelines of the International Monetary Fund, which agreed to renegotiate the Argentine debt with certain conditions. These include that the country apply greater regulations to bitcoin and cryptocurrencies, although the government has denied such a requirement.