Banks in Argentina Barred from Processing Crypto Buy Requests

Argentina’s central bank dealt a major blow to Bitcoin and cryptocurrencies when it issued an order restricting banks from processing what it termed as “unregistered” digital assets, according to reports on May 6, 2022.

The Central Bank of Argentina Moves to Ban Crypto Purchases

According to the central bank, the ban is to protect clients against risks associated with crypto acquisitions.

The directive comes two days after Banco Galicia, a private bank and the largest by value, and Brubank, a digital bank, said they would accept client orders requesting direct crypto purchases.

Banco Galicia explained that it was limiting its support for four cryptocurrencies in Bitcoin, ETH, XRP, and the USDC stablecoin since they were projects offering practical solutions.

The retrogressive move bog attempts by blockchain and crypto proponents from advancing the technology’s causes in the South American country. Over the years, Argentina has been plagued by economic turmoil and hyperinflation, significantly eroding purchasing power and driving citizens to poverty.

Accordingly, digital assets are being increasingly finding adoption because of the store of value element of Bitcoin and the borderless nature of liquid cryptocurrencies. Most notably, Bitcoin finds utility as being a choice store of value and a medium of exchange.

Argentines Limited, Bitcoin as a Tool to Fight Against Inflation

The monetary authority’s orders preventing banks from processing crypto purchase requests from fiat-crypto ramps would limit its citizens in cushioning their wealth through alternative finance vehicles.

However, according to Banco Galicia, the demand for cryptocurrencies is at record highs.

In a recent statement, two representatives from the bank said most people know about cryptocurrencies, with a significant chunk considering digital assets as worth investments.

More than 90% of people say they know cryptocurrencies, and many even see them as an investment and the financial future. We surveyed our clients. More than 60% want to incorporate these assets into their investment portfolio, with the youngest public being the one that demands them most.

As BlockMagnates earlier reported, a remote municipality in Argentina had resorted to mining cryptocurrencies. The mayor cited the store-of-value benefit of Bitcoin, saying it helps fight against raging inflation which topped 50 percent on a year-on-year basis.