Argentina warns about financial risk of investing in crypto assets
money legal tender
Crypto assets pose risks and challenges for their users, investors, and for the financial system as a whole, warns Argentine Central Bank and the CNV, a sort of securities exchange regulators.
In recent years, proliferation of crypto assets, dynamics prices and their underlying technology and global reach, as well as the activities associated with their operations, have led to different national and international organizations issuing recommendations in this regard, Argentine regulators said in a statement.
In this scenario, the Argentine regulators warn about possible implications and risks that crypto assets may carry, as well as recommend a prudent attitude in order to mitigate a possible source of vulnerability for users and investors.
Although crypto assets currently do not show significant levels of acceptance and use in Argentina, the speed of development and the growing interest in them make it necessary to adopt a precautionary attitude towards them, they claim.
“Crypto assets can be defined as a digital representation of value or rights that are transferred and stored electronically using Distributed Ledger Technology (DLT) or other similar technology. While these technologies could help promote greater financial efficiency and innovation, crypto assets are not legal tender.”
“It is important that those who decide to operate with crypto assets or invest with products related to them have access to sufficient information to understand and evaluate the risks associated with them, considering, in particular, the following aspects”.
The regulators have been subject to mockery in social media, due to the Argentine peso high instability and economic crisis the country has experienced over the last decades. The country has been in default several times.
The full statement claims that crypto currencies are not legal tenders, that they may be subject to cyber attacks, among other warnings you may read below.
They are not legal tender
Crypto assets, which seek to be used as payment instruments or for investment purposes, are not issued or endorsed by a central bank or government authority and, as mentioned, do not meet the necessary conditions to be considered legal tender.
It is observed that the prices of crypto assets can fluctuate significantly in short periods of time, which can lead to significant financial losses for their holders.
Likewise, the value of crypto assets depends on their degree of acceptance, so it can be affected by the occurrence of adverse events globally.
Operational disruptions and cyberattacks
Crypto-asset exchange, trading and custody platforms could face operational disruptions (for example, interruptions in the continuity of services or system failures) during which users may not have access to their holdings and, as a result, cannot carry out operations. , a situation that could be reflected in economic losses.
These platforms can be the target of cyberattacks that involve the loss or theft of the access codes of the users, which could mean the loss of the crypto-assets – and consequently the totality of the invested capital – without the possibility of recovering them.
Lack of safeguards
The balances registered in virtual cryptoactive wallets do not have deposit insurance or the safeguards that current regulations provide to users of financial services.
Currently, there are no crypto assets or tokens in Argentina whose acquisition or possession can benefit from any of the guarantees provided by the regulations for banking or investment services.
Fraud, incomplete information and lack of transparency
The information provided by crypto asset service providers may be complex or incomplete and may not adequately disclose the risks faced by users and investors. The prices of crypto assets are formed in the absence of effective mechanisms that prevent their manipulation.
Risks of money laundering and financing of terrorism and potential non-compliance with exchange regulations.
Due to its easy access, its global scope and the limited capacity that exists for its monitoring and analysis – due to the limited traceability depending on the underlying technology – it is necessary to warn about the potential risks associated with non-compliance with international standards on prevention. money laundering and terrorist financing and with respect to current exchange regulations.
Cross-border nature of operations
In some cases, the different actors involved in operations with crypto assets are not established in Argentina, so a possible conflict could be outside the jurisdiction of the Argentine courts and authorities; thus increasing the cost of defending the rights of users and investors.
Within the framework of the legal mandates of the regulators involved and the recommendations of specialized international organizations, this alert is issued on the risks for the general public.
La entrada Argentina warns about financial risk of investing in crypto assets se publicó primero en Derecho en Zapatillas by Sergio Mohadeb.
Argentina warns about financial risk of investing in crypto assets
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