The Central Bank of Argentina (BCA) plans a series of laws aimed at regulating digital wallets in the country. According to the portal infobae the measure initially targets services such as Mercado Pago and other fiat currency wallets.
This new legal framework is aimed at preventing fraud from being facilitated by these tools. According to leaks in local media, publication of the law is imminent.
However, the biggest risk comes from the Administración Federal de Ingresos Publicos (AFIP), the Argentine tax body. This is because the law may give AFIP the power to confiscate money from these wallets. And according to reports, this practice is already taking place in Argentina.
Digital wallets as a target
According to the report, the use of digital wallets has grown enormously in Argentina. That’s why BCA works on the production of new rules.
These, in turn, aim to establish rules to protect users’ money and improve customer identification (KYC) practices.
“It’s not about banning anything, but about applying the same rules that banks must comply with today in relation to knowing their customers,” the BCA said.
One of the applications mentioned by BCA was Mercado Pago, the largest in Argentina with around 30 million users. This number is equivalent to two thirds of the 45 million Argentines. But the law is also intended to regulate cryptocurrency wallets, especially those that offer prepaid cards.
The BCA announced that it is implementing these new rules because there is a lot of fraud when it comes to using these tools. In that sense, some companies do not have due diligence while they are being workers.
The municipality also stated that not all wallets work in the same way. Therefore, the regulation also aims to create a general standard, facilitating the work of the authorities.
The BCA did not reveal what the new rules will be, but last year it established that wallets had to preserve 100% of customers’ funds in their bank accounts. That is, these applications could not provide loans with the deposited funds.
At the same time that the BCA is drafting the new legal framework on digital wallets, AFIP has its own plans. The agency seeks to create a mechanism that allows the confiscation of funds in digital wallets of taxpayers with debts.
This means that Argentines could have funds withdrawn from their digital wallets if they did not pay taxes. AFIP estimates that nearly 10,000 taxpayers are expected to have their digital wallets confiscated in the coming months.
Contrary to BCA rules, confiscation of funds appears to be a reality. Argentine portals claim that a case of confiscation has already taken place: a judge authorized the institution to take control of the funds of a user’s digital account to pay accumulated tax debts.
The confiscation of funds directly from bank accounts is something Argentines know well. This occurred in 2001 during the episode known as “corralito”. At the time, the country’s government confiscated all the dollars that the population had kept in the banks, leading to a wave of chaos and widespread poverty.
Due to the experience of the corralito and the high inflation of the peso, most Argentines leave their savings in dollars and outside the banks.