Argentina - Crypto penetration

intro

The high level of inflation has been a severe issue for Argentina's economy for the last thirty years. According to Worlddata (1), from 2018 to 2023 it is 746.54%. That's why cryptocurrency were early adopted by Argentinians as a hedge against inflation even ten years ago. It's described in Nathaniel Popper's book “Bitcoin Digital Gold” (2). That's why Argentina is very prospective as a crypto market. Also, it has some regulations that allow cryptocurrency exchange. In 2024 after Javier Milei became the president and his liberal reforms started, local crypto market got more benefits in the field of regulation.

Security level

According to our rating, Argentina has a considerable danger security level. This country has 36 points (from 100) for safety level in Numbeo crime rating (3). The homicide level (4) is 4,6 per 100,000 inhabitants a year. The story of firearm-related death (5) is 5,72 per 100,000 inhabitants a year.

Crypto Payments

Before Milei came in power crypto payments were popular, but didn't have a legal status. However, even in 2022-2023 some crypto cards legally operated in the country through integration with VISA/Mastercard. Also, it was possible to convert crypto to fiat online. Argentinians use crypto (especially stablecoins) as an alternative to national currency.

In December 2023 the government legalized (6) contracts and barter deals in crypto. Local Foreign Minister Diana Mondina confirmed (7) this information.

Unfortunately, the government doesn't want to allow crypto payments because Argentina has no free currency exchange.

Crypto Salaries

Since crypto payments are legal in Argentina, payments or rewards in crypto may be provdided to individuals in some form. However, it's not clear how regular payroll can be paid in crypto, because of social contributions. Please, contact with us, if you have information on this topic.

Legal

The Commision Nacional Valores (CNV) and Banko Central de Respublica Argentina (BCRA) are the two primary crypto regulators in the country.

According to Coindesk (8), crypto exchanges didn't pay taxes until 2022. They operated as fintech companies registered as payment service providers (PSP). In the Summer of 2023, the Senate of Argentina discussed (9) changes to the AML law. These changes must provide a basis for crypto regulation in the country. The National Securities Commission (CNV) became the primary crypto regulator in the AML niche. The head of CNV, Martin Brienlinger provided some information about the crypto landscape in the country.

Details

According to informal information, there are 10 million accounts open in Argentina and this is equal to the same amount as in the traditional capital market, between mutual investment funds and commissioning accounts.

Furthermore, he noted that “Argentina, in Latin America, is the second country in adoption and the 13th in the world. The first article, 37, establishes that the CNV will be the application authority to register virtual asset services and will have the same powers as for regulated capital market agents”.

In May 2022, the Central Bank, by Communiqué 7506, banned (8) crypto payments to banks. PSP providers were also restricted from dealing with crypto.

Quote from Communique

Financial institutions may not carry out, or facilitate their clients to carry out, transactions with digital assets –including cryptoassets and those whose yields are determined based on the variations that they register– which are not authorized by a national regulatory authority or by the BCRA.

This decision was likely connected with an attempt from large local banks (10) - Banco Galicia and Burbank to offer crypto exchange through their banking apps.

Despite all restriction against crypto from the previous government of Argentina, it gave a legal basis to the industry in the form registration procedures for VASPs (PASV in Spanish) and made CNV the main VASP regulator. CNV has adopted (11) an additional decree (12) in March 2024, which made VASP registration an obligatory procedure. However, it is possible not to register if the volume of transactions is less than 35000 UVA (less than $31,000 per month).

Also VASP need to pass UIF (Financial Intelligence Unit) registration. However, these procedures are relatively simple. As for Novemver 2024 there are 88 entities in CNV VASP register (13). 15 of these companies are foreign legal bodies from USA, El Salvador, Uruguay and the EU. Making it possible for foreign legal bodies to pass VASP registration, Argentina demonstrates a loyalty to different forms of business. Local companies such as Lemon Cash, Ripio, BuenBit, Binance Argentina, Bitso Argentina, Mercado Libre and others are in dialugue with regulators. Large exchanges already have a fintech license for fiat operation - PSP (Proveedores de Servicios de Pago).

Also, there is a good trend for regulating basic business operations with crypto—in July 2024, the first company with capital nominated in BTC and USDC got official registration approval.

Taxation

Tax name	Index
PIT tax Min	5
PIT tax Max	35
Corporate tax (CIT)	35
Min Individual CGT (for crypto)	15
Max Individual CGT (for crypto)	15
Wealth tax Min	0.5
Wealth tax Max	2.25

Currently, we need more information about crypto taxation in Argentina. Please get in touch with us if you have it. However, based on the Binamite overview (14), individuals pay 15% CGT for their crypto purchases, and corporations pay 25-35%. In 2024, the taxation of crypto transactions in Argentina did not change - the government was forced to withdraw the tax amnesty bill due to its lack of support in Parliament.

PIT

According to PWC tax summaries (15), crypto operations provided in Argentina may be subject to personal income tax, which has a 5-35% rate. However, crypto purchases and savings are taxable by CGT.

CGT

Based on Cointelegraph (16), there is a draft bill about savings declaration in Argentina - “Declaración voluntaria del ahorro argentino no exteriorizada”. Based on the law, basic CGT for crypto savings will be the same as standard CGT in the country by Law 27,430 (17).

There is also a special Withholding tax for foreign savings in Argentina. Based on LawReview (18), it equals 0.5% - 1.25%, and for any foreign income higher than 6 min ARS, the WT rate is higher - 0,7 - 2,25%.

CIT

Argentina’s Federal Administration of Public Income (AFIP) provides some initiatives for crypto taxation for domestic exchanges, which include “check tax” and regular declaration (19)(each month) of all financial operations provided by local crypto firms. According to hg.org (20), the local regulator plans to create a local Chamber of crypto companies and provide more regulations.

According to Markets Insider (21), Argentina also has a “check tax” for crypto-related fiat transactions. This basic tax for banking operations is up to 0,6% of the transaction amount. Crypto exchanges with a Payment Service Provider (PSP) license were excluded from this tax. In November 2022, the law text changed (22), and crypto operations provided by PSP are currently taxable by check tax.

Links

1)World Data. Inflation rates in Argentina. Article

2)Nathaniel Popper “Bitcoin Digital Gold.” Amazon

3)Crime Index by Country 2023 Mid-Year

4)List of countries by intentional homicide rate

5)List of countries by firearm-related death rate

6)DLNews. You can now pay your contracts in Bitcoin in Argentina, says minister of foreign affairs

7)Diana Moreno. X Account

8)CoinDesk. Argentina to Tax Crypto Exchanges. Article

9)Argentina: Gobierno dice que hay 10 millones de cuentas con criptomonedas y avanzará con una regulación

10)Financial times. Crypto adoption spreads in Argentina even as the central bank tightens rules. Article

11)Baker McKenzie. Argentina: The National Securities Commission has implemented the Registry of Virtual Asset Service Providers