Argentina rushes to regulate digital assets as FATF evaluation looms

Argentina is rushing to regulate digital asset activities as an upcoming anti-money laundering (AML) evaluation by the Financial Action Task Force (FATF) edges closer, local news outlets reveal.

FATF, a Paris-based global organization that develops AML policies, is set to visit Argentina in early March to evaluate the progress the South American country has made in the fight against dirty money. The Javier Milei administration is rushing to plug any gap, and digital assets have emerged as one of the most significant loopholes.

In 2023, the National Securities Commission (CNV) proposed expanding the AML framework to include virtual asset service providers (VASPs) under the previous government, but the plan fell through. When Milei took over in December, it was assumed he would push for regulatory changes through parliament, but Congress is in recess until March. This has forced the government to pursue an executive order.

Under the new order, VASPs will be required to obtain a license from the CNV before serving Argentinians, even if based overseas. They must also adhere to other financial rules, including reporting suspicious transactions and enforcing AML, KYC, and CFT programs.

Argentina’s rush is in an effort to avoid going on the infamous FATF grey list, currently occupied by countries such as Nigeria, Barbados, Bulgaria, Türkiye, the United Arab Emirates, Vietnam, and Gibraltar.

The last time Argentina came under FATF evaluation was in 2010 under the leadership of former president Cristina Fernández de Kirchner. The country fared poorly and was relegated to the grey list, which took five years to exit.

Argentina’s digital asset industry is split on the executive order’s impact. Some welcome the regulations, saying they will protect investors and legitimize the industry.

“The inclusion of exchanges as subjects obliged to register with the FIU and report suspicious operations is accepted as something unavoidable in the context of international finance. It is a FATF directive, with all that this implies,” local lawyer Ricardo Mihura Estrada told one news outlet.

Others, like the industry lobby group Bitcoin Argentina, say that while enforcing AML is beneficial, the securities regulator is not equipped to oversee the digital asset sector.

Regulating digital assets has become a prerequisite for a clean bill of financial health from the FATF. Türkiye, for instance, has been on the FATF grey list for years, and while it has dealt with 39 of the 40 concerns by the global organization, its regulation of the digital asset sector has kept it on the dreaded list.

In January, the finance minister revealed that the country is edging close to drafting rules for the sector as it strives to finally exit the list.

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