Separating Fact from Fiction in Argentina’s Economic Policy

• Javier Milei’s administration does not plan to adopt bitcoin as Argentina’s currency, focusing instead on dollarization.
• Discussions with El Salvador focused on regulatory frameworks for crypto, not adopting bitcoin as legal tender in Argentina.

In the wake of Javier Milei’s election, various reports have surfaced, inaccurately portraying his administration’s stance toward bitcoin in Argentina. Contrary to these claims, Milei is not steering Argentina towards adopting bitcoin as its standard currency.

Misinterpretations of Milei’s Bitcoin Policy

Recent headlines have sparked confusion by suggesting Milei plans to implement a bitcoin standard similar to El Salvador’s approach. However, these interpretations do not align with his actual policy intentions. 

Milei has indeed shown a positive attitude towards bitcoin and has been critical of the central bank’s operations, but his primary economic strategy focuses on the dollarization of Argentina, not on establishing bitcoin as legal tender.

During a meeting last week with local regulators and the Director of the Crypto Active division from El Salvador, discussions concentrated on self-custody rights and the creation of a regulatory framework for cryptocurrencies that complies with international standards, specifically those set by the Financial Action Task Force (FATF). The conversation did not involve plans to integrate bitcoin as an official currency.

Argentina’s Crypto Regulatory Environment

The Argentine government is currently revising its regulations on cryptocurrencies to ensure compliance with FATF guidelines. This includes strict regulations for Virtual Asset Service Providers (VASPs) to enhance transparency and security within the financial system, without necessarily moving towards a bitcoin standard. 

“Bitcoin is viewed with skepticism by Argentine authorities, which seem more committed to the GAFI and IMF than with self-custody and on-chain transactions.” – Ricardo Mihura, president of ONG Bitcoin Argentina

Ricardo Mihura, president of ONG Bitcoin Argentina, noted skepticism from Argentine authorities regarding bitcoin, highlighting their focus on adhering to FATF and International Monetary Fund (IMF) standards rather than embracing decentralized crypto transactions.

“Last month, amendments to a tax bill in the Senate went in that direction: only crypto in custody with local VASPs seems to benefit from the tax amnesty regime proposed by the Executive.”

Furthermore, recent amendments to a tax bill in the Argentine Senate reflect a cautious approach to cryptocurrencies, favoring crypto assets held in custody by local VASPs as part of a proposed tax amnesty regime by the Executive. This indicates a regulatory inclination towards control and supervision, rather than a full adoption of bitcoin or any other cryptocurrencies as legal tender.

The Economic Context and Milei’s Actual Focus

Amid challenges such as inflation, currency devaluation, and stringent forex control, the Argentine central bank continues to prohibit banks and payment service providers from offering crypto-related services.