Wednesday, May 22, 2024

ECONOMY | 21-05-2021 13:35

Argentina's Central Bank warns citizens of risks of cryptocurrencies

Argentina, the land of currency crises, warns about crypto risks.

Argentina, the poster child for currency turmoil and sovereign defaults, has become the latest country to warn its citizens about the risks of investing in crypto assets amid the recent global craze.

The Central Bank and the National Securities Commission (CNV, securities regulator) put out a joint statement Thursday to alert people on the problems associated with crypto investing. While many governments and financial authorities have urged caution with these types of assets, the irony isn’t lost given the country’s troubled economic history of currency devaluations, hyperinflation and wiping out citizen savings.

Cryptocurrencies “can cause significant financial losses for its holders, including the possibility of losing the totality of the resources invested,” according to the statement, which also reminds potential investors that they aren’t legal tender and called on Argentines to be “prudent.”

That point hits home in Argentina, where the peso has lost more than 80 percent of its value in the past four years. Back in 1989, hyperinflation wiped out the country’s currency and the world’s largest sovereign debt default in 2001 triggered an overnight devaluation. Argentines largely keep their savings in US dollars despite strict controls in place that limit exchanging pesos for greenbacks.

The government bodies also said in their statement that despite the risks, crypto trading isn’t at “significant levels of use and acceptance,” in Argentina, though they observed that “the speed of development and the growing interest in them make it necessary to adopt a precautionary attitude.”

The cryptocurrency market, although small, has increased tenfold since 2020 in Argentina, according to Maximiliano Hinz, Latin American director at Binance, a digital asset exchange platform with more than 15 million users in 180 countries and a daily volume of transactions exceeding US$20 billion dollars.

Crypto assets are liable to fraud, to be used for money-laundering and the financing of terrorism, warned the Argenine regulators. 



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