Companies will have to use their assets to honor international commitments. Crypto assets can be either in the country or abroad.
Through a new resolution, the Central Bank of the Argentine Republic (BCRA) is requesting all the companies established in the country to dispose of all the assets that they have acquired abroad, before going to the institution to request foreign currencies.
Cryptocurrencies stored both abroad and in the country are included among the assets considered by the bank. In other words, if an Argentine company has to pay a debt to an international provider, it must have its foreign currencies and crypto assets to honor its commitment.
The statement also includes foreign banknotes and coins, gold coins or bars, demand deposits in financial institutions abroad, and other investments that allow immediate availability of funds. Investments in external government bonds, funds in investment accounts of investment managers abroad, and funds in accounts of payment service providers are also included among these assets.
The measure excludes the business assets that are in Argentina. For example, if a company has capital in US dollars or euros in a local bank and does not have funds abroad, it can request foreign currencies at the official exchange rate from the BCRA, without using its funds.
Tax consultant Marcos Zocaro explains that companies must first dispose of their “available liquid external assets”, which include banknotes, gold and crypto assets, among others. The exceptions are all the holdings in foreign currencies deposited in accounts at local financial institutions. For example, if the company has US dollar deposits in foreign banks, it will first have to use them.
According to Zocaro, the purpose of the bank’s measure is, in theory, to avoid the flight of US dollars in the short term. However, he believes that its success is not entirely certain. Besides, companies that have already declared holdings of cryptocurrencies must use them, as in this type of case.
The consultant added that those companies that are using them without having declared them could receive sanctions if they are discovered. To request foreign currencies from the central bank, companies must issue a sworn statement that they do not have resources abroad. However, they can have US dollars or euros in local commercial banks.
In this regard, Argentine bitcoiner Franco Amati stated that cryptocurrencies can be in custody services, exchanges or cold wallets, either inside or outside the country
Amati stressed that to request foreign currencies at the cheapest exchange rate; companies cannot have crypto assets or liquid assets of any kind abroad. He says that the bank is requesting the companies that use those assets to transfer money abroad not to request money from them.
Since 2019, Argentina has had an exchange rate control, which has come to affect Bitcoin and cryptocurrencies in general. Last year, the country’s central bank limited Argentine citizens’ purchase of cryptocurrencies with credit and debit cards.
By Alexander Salazar