The crypto industry has important discussions about the regulation of its assets so that, without losing the spirit of freedom, the public and the States can regain public confidence in cryptocurrencies and protect savings of users. The draft classifies different platforms into centralized and decentralized to regulate them differently. It was developed and presented to the public by the Argentine NGO Bitcoin, which has historically opposed the regulation of cryptocurrencies.
With almost 10 million users in Argentina with digital assets, this bill represents an urgent pending task for the country. Although there are some regulations that tax the holding of cryptocurrencies – especially investment profits and crypto mining – this is an important step to provide a little more transparency in a developing market.
“We have always rejected attempts to regulate the crypto economy, but this time we set ourselves the goal of providing a positive response, with only two objectives: preserving decentralization and protecting savings and trust to the public,” explained the lawyer and president of the NGO Bitcoin Argentina, Ricardo Mihura during the presentation of one of the panels of Labitconf 2023, the event that every year brings together the entire crypto community of the country. The entity is responsible for promoting that the draft enters the public debate so that users and the ecosystem can contribute before it enters Congress.
The axis of the project
One of the main points established in the law, which, in principle, has only nine articles, is the legal definition of cryptoassets. It defines them as a “digital representation of value registered in a distributed service technology protocol or similar technology, cryptographically secured.” It is classified in two ways, which will later be regulated differently: decentralized and centralized (licensed and unlicensed).
Decentralized are those developed with open source with issuance, circulation and validation independent of the members of a community (Bitcoin and Ethereum are a clear example of this type). As they are outside the regulatory jurisdiction of the enforcement authority (which must be determined by the Executive Branch according to the draft law), they are considered money without legal tender and the right to operate with them freely and to develop them recognized.
It does not define them as a negotiable security (shares) or a digital currency, but equates their treatment to any foreign currency (the legal tender in Argentina is the peso). Since this is not a negotiable amount, they must allow income tax to be paid on their purchase and sale, as established in the 2017 Tax Reform.
It is the riskiest investment in the sense that the responsibility for operating cryptoassets and decentralized platforms remains purely and exclusively with its users. “And this is not because decentralization is a magic word, but because decentralization eliminates the moral risk, because it allows the parties to interact directly and the objective security provided by the code,” explained Swear.
Centralized companies, on the other hand, are subject to the normal rules of qualification requirements and administrative management and are “rewarded” with access to the banking and payment system for themselves and their clients. States and companies can issue this type of assets as a public offering in the first case, and negotiable securities (shares) for the second case. In this case, judicial protection and compensation in case of failures are guaranteed.
The final decision on whether a crypto asset or platform is truly decentralized or not (if not, joint and several responsibilities govern those who operate and promote it, unless it operates with a license), is up to the judge in certain cases, at any time. to settle a claim by an injured user against a person sued as jointly responsible.
“Thus, the axis of the project is marked by the difference between decentralization and centralization. And by volunteers who fall within a regulated pattern, and those who choose to operate outside that framework,” reports the NGO Bitcoin.
Argentina is one of the countries with the largest cryptocurrency users (above countries such as Germany, Italy, the United Kingdom and France). According to a survey by the company CryptoSlate in May 2023, it has a 20 percent annual growth in the adoption of cryptocurrencies and almost 10 million users.
“In our country, this type of asset is widely adopted by the Argentine society, which can be explained by two main reasons. The first is the depreciation suffered by our currency in a highly inflationary context. The second, the reaction to the exchange restrictions currently in force in our country, which leads to the search for a possibility to store so-called stable coins (cryptocurrencies tied to one or more fiduciary currencies such as dollar or other underlying assets such as North American Treasury bonds) or, if the appetite for risk is greater, in short, medium or long-term investments, depending on each case,” explains the Analysis of the phenomenon of cryptoassets in Argentina from the Argentine Chamber of Fintech.