TL;DR Breakdown
- Argentina approves a $45 billion debt deal with the IMF.
- The deal stands to discourage the use of cryptocurrencies in the country.
- IMF unwavering stand on the crypto sector.
The IMF, over time, has shown to be a non-believer in cryptocurrency. IMFs position on the development of cryptocurrencies in Argentina may have a significant impact on the state of the market. Late Thursday, after an overwhelming majority voted in favour, the Argentine Senate approved a debt agreement worth $45 billion with the International Monetary Fund (IMF).
Argentina’s crypto stand at a crossroad
The IMF-Argentina debt agreement ties to a broader bargain that incorporates a ban on crypto usage. In addition, on March 11, 2019, the Chamber of Deputies approved a debt agreement that will refinance a $57 billion program Argentina received in 2018.
Currently, Argentina’s crypto journey sticks in a rut. In August 2021, Argentine President Alberto Fernandez indicated that the issue had been under discussion and is still unresolved. However, Fernandez advised investors against putting all of their eggs into one basket by suggesting that the matter should be handled cautiously.
President Alberto Fernandez expressed these concerns during an interview with Argentinian journalist Julio Leiva. Even though the introduction of crypto as legal tender will assist deal with inflation, the same must be doubted in terms of security. Is there a possibility that this line of thinking might lead to stringent cryptocurrency regulations in Argentina?
Argentina’s high inflation and foreign currency restrictions have encouraged people to get interested in cryptocurrencies over the last several years, making Buenos Aires a major node for blockchain startups and innovation. Argentina ranks tenth on the Chainalysis Global Crypto Adoption Index, released earlier this year.
The agreement with the IMF has left the country’s cryptocurrency industry worried about what this legislation may imply if implemented. On March 3, the IMF announced that it had reached a staff-level agreement with Argentine authorities. However, several Argentine news outlets noticed a passage referring to cryptocurrencies in a leaked draft of the text days earlier.
The letter of intent also stipulates that while commercial banks are liquid and well-capitalized, robust bank supervision will continue, especially as the unwinding of pandemic-related regulatory forbearance proceeds.
For the time being, crypto firms and organizations are still attempting to determine the ramifications of discouraging cryptocurrencies. The IMF’s current crypto power intervention in Argentina is not unique.
IMF stands on cryptocurrencies
According to Cryptopolitan, the IMF issued a press release in February 2022 urging El Salvador to remove Bitcoin as legal tender. The board of directors raised concerns including consumer protection difficulties, integrity, financial stability, and fiscal repercussions in the statement.
The IMF’s concerns came after El Salvador requested a $1.3 billion loan from the entity. However, the board stated that the financial bailout offer would be approved if they met the requirements. One of these is to repeal the Bitcoin legislation, rendering it an illegal currency in the country. Despite this, President Bukele dismissed the allegations and stated that BTC is legal with respect to the US dollar.
The IMF’s goal is to maintain the stability of the global monetary and financial system, and crypto-assets are rocking the boat. To that end, it’s uncertain what approach Argentina’s government will take. If the Argentine government caves to IMF demands, the crypto industry will suffer a loss.
