Argentina Finalizes Crypto Regulations for VASPs, Mandating Compliance by September

Argentina has taken a significant step towards establishing a clear legal framework for the cryptocurrency industry by finalizing regulations for virtual asset service providers (VASPs). The National Securities Commission (CNV) published General Resolution No. 1058 on March 13, outlining a comprehensive set of obligations for VASPs. These obligations include registration, cybersecurity, asset custody, money laundering prevention, and risk disclosure. The primary goal of these regulations is to ensure transparency, stability, and user protection within the crypto ecosystem.

The new rules mandate that VASPs must separate company and client funds, undergo annual audits, and submit monthly reports to the CNV. The timeline for compliance varies depending on the entity's registration status. Individuals registered with the PSAV (registry of virtual asset service providers) have until July 1 to comply, while companies incorporated in Argentina must do so by August 1. Foreign-incorporated companies have until September 1 to meet the requirements. Noncompliance may result in the revocation of registrations and potential court-ordered blocks on operations.

The regulatory push comes at a time when Argentina is experiencing a growing wave of crypto adoption, driven partly by the rapid depreciation of the Argentine peso. The country has seen a surge in the use of stablecoins like Tether’s USDt, reflecting a broader trend of locals turning to digital assets for financial stability. The regulations are part of a broader effort to integrate cryptocurrencies into the financial system while mitigating risks associated with digital asset transactions.

The finalization of these rules follows a year of intensified regulatory scrutiny, beginning with the CNV's implementation of registration requirements for crypto issuers in 2024. The regulatory pivot was necessitated by the increasing adoption of cryptocurrencies and the need to address potential risks, including money laundering and fraud. The new regulations are expected to provide a more stable environment for VASPs, fostering greater trust and participation in the crypto market.

The regulations also address concerns about the LIBRA memecoin scandal, which involved President Javier Milei. Despite the scandal, crypto adoption in Argentina has continued to rise, indicating a strong interest in digital assets among the population. The new rules are designed to protect users and ensure that the crypto ecosystem operates within a transparent and secure framework.

The finalization of these regulations is a significant milestone for Argentina's financial sector, positioning the country as a leader in the region for crypto regulation. The rules are expected to attract more VASPs to the country, fostering innovation and growth in the digital asset space. As Argentina continues to navigate the complexities of the crypto landscape, these regulations will play a crucial role in shaping the future of digital finance in the country.