Wednesday, February 21

Argentina agreed with the IMF, what could change for bitcoin holders?


Key facts:
  • The government must meet specific targets, so it needs to raise money.

  • The cryptocurrency industry encompasses almost a quarter of Argentine funds abroad.

Friday, January 28, 2022 will be marked in Argentine economic history as the day the country managed to refinance its largest historical debt with the International Monetary Fund. To do this, the country must comply with some guidelines that, indirectly, can affect bitcoin (BTC) holders in the country.

In 2018, during the government of Mauricio Macri, Argentina agreed with the IMF on a loan of 57.1 billion dollars. Until that moment, reports BAE Business, it was the “largest disbursement in the history of the IMF,” according to its former director Christine Lagarde.

The expiration of the payments corresponding to this debt, one of them of USD 2,800 million scheduled for March 2022, forced the Argentine State to dialogue with the multinational fund to reach an understanding that allows it to comply with the guidelines.

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That was how the government, today headed by Alberto Fernández, promised to carry out some changes in monetary policy, economic and financial. In the next two years, Argentina will have to achieve certain objectives related to the fiscal deficit, money issuance and tax administration. It is on this last point that the cryptocurrency industry could interfere.

President Alberto Fernández described the agreement to pay the debt with the IMF as “a solution”. Source: YouTube Argentine Public Television.

The role of bitcoin in taxes in Argentina

According to what was reported by non-detailed sources to the middle iProup, bitcoin and other cryptocurrencies could be affected by these new tax measures in Argentina. Even one of the projects to regulate cryptocurrencies is expected to advance in Congress. So far, attempts to do so have been unsuccessful.

The main reason has to do with the growth of this industry in the country. According to the aforementioned media, the blockchain data analyst company Chainalysis states that the cryptocurrency market in Argentina reaches a total value of USD 68,000 million.

To put this figure in context, only surpassed in South America by Brazil, it should be noted that it represents more than 25% of Argentine money in dollars that is “outside the system”. In addition, it is equivalent to 17% of the country’s foreign assets and is 10% higher than the valuation of Mercado Libre, a company listed at USD 60,000 million.

Taking into account the urgent need for dollars that the country faces, with some reserves in the Central Bank falling more and more, the Federal Administration of Public Revenues could tighten controls on cryptocurrency holders. In fact, this measure was already specified before the agreement with the IMF, as reported by CriptoNoticias. Considering that the International Monetary Fund is not very adept at cryptocurrencies, it is to be expected that it will support this development.

According to government data, Argentina’s gross debt was at record highs in the third quarter of 2021. Source: Argentina.gob.ar.

For now, those who operate with bitcoin and other cryptocurrencies in Argentine territory know that they must comply with two taxes. These are Income Tax and Personal Property Tax.

In addition, the provinces began to play their role on the scene. Some of them, such as Córdoba, Tucumán, Entre Ríos and recently Catamarca, have legislated on the payment of Gross Income from the profits generated by trading with cryptocurrencies.

Faced with these circumstances, 2022 can become a momentous year for bitcoin in Argentina. The country needs to cut spending, raise money and prevent more taxpayer funds from leaving the formal system. Although there is nothing official yet, it is a possibility that the State will find in this incipient industry a target to aim at.



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