Industry under debate: how cryptocurrency regulation progresses in Argentina

On April 19, 2023, he obtained a half sanction in the Chamber of Deputies the project to reform the national AML/CFT regulatory system promoted by the FIU (Financial Information Unit). This is a law that reforms the national system for the prevention and prosecution of money laundering, which incorporates the possibility of creating a Registry of Virtual Assets Service Providers. It will be the National Securities Commission (CNV), the body in charge of registering, regulating and supervising the PSAVs. after this half penaltyis still waiting in Senadores awaiting treatment.

• Supervise, regulate, inspect and supervise individuals and companies that provide crypto services
• Keep the registry and protect the interests of investors and/or users.
• Set equity requirements.
• Promote the development and strengthening of the industry
• Establish information regimes
• Dictate rules on transparency and stability of crypto markets.

Meanwhile, on Friday, July 14, 2023, the FIU presented his regulatory project of the prevention system laundering crypto assets in an institutional meeting in front of organizations and companies from the fintech and crypto sector. There were proposals from both sides to advance how the law would be applied in addition to expressing the needs of the sector, under the guidelines recommended by the FATFinternational organization governing the prevention of money laundering and financing of terrorism.

But in the last week, a novelty has emerged that comes from the exchange side. Lemon Next to the Argentine Chamber fintech submitted a proposal for tax reform which is synthesized in three points:

• The Personal Property Tax exemption for crypto
• Increase the non-taxable minimum of crypto earnings tax to more reasonable amounts
• Eliminate taxes for crypto transactions

“It is not about inventing anything new, but about accompanying with a favorable tax regime a regulation that promotes the industry as the case of countries like Portugal. As an industry, these spaces for dialogue with regulators allow us to raise the need not to be treated equally to a Capital Market and defend the values ​​for which the crypto ecosystem was created. We are a new industry that is paving the way for new technologies that solve new age problems,” he said. Lemon after the Scope consultation.

The reform would be part of the projects that seek to promote the industry development in Argentina through a broader legal framework that adds the reform project to the Anti-Money Laundering Law.

Opacity in regulation: what happens with crypto taxes in Argentina

Although in Argentina there is still no clear tax framework for the various cryptocurrency tradingthere are different regulations, opinions and resolutions, both at the national and provincial level, which affect the industry and its users.

Personal Assets, Income Tax and the most recent law that taxes the cryptocurrency mining In the province of Buenos Aires, there are currently the three regulations that users of digital currencies must pay attention to when making their affidavits and complying with their tax obligations. However, these regulations currently present gray in terms of their definitions.

Ricardo Mihura Estradapresident of the NGO Bitcoin Argentina in dialogue with Ambit He explained that the Personal Assets Tax Law already exempts holdings of intangible assets, among which are all crypto assets that do not carry a credit right for the holder. “The latter, those that represent credits such as centrally issued stablecoins, are taxed as such, but Bitcoin, ETH and all decentralized crypto assets are already exempted.”

“The AFIP he currently does not share this interpretation. The justification for this exemption is the same as for other intangible assets: to promote innovation and creativity, by encouraging individuals and businesses to develop and maintain valuable intangible assets without the burden of a tax on them, plus the Their valuation can vary drastically from one moment to the next.

At the same time, he maintains that “the worst tax regulation drama of the profits from the results of the sale of crypto assets is its Terrible writing and legal conception. It is not really understood what the law meant. There are results for which it is not known if they are taxed at 5%, 15% or 35%, with adjustment for inflation or exchange differences or without such adjustments in the computable cost. Since the law was enacted in 2018, we have been denouncing this lack of clarity, but neither the regulations nor the AFIP have shed light on the subject. This is serious, as it may be safer to keep the results without declaring than to risk declaring them according to a equivocal legislation”.

The sector’s perspective: what a crypto law in Argentina must have

For Mihura, “good regulation should start from the basis of distinguishing that there are three universes in the crypto economy, and there will continue to be: 1) crypto assets and centralized platforms willing to submit to regulations to better reach their customers and interact with the banking system ; 2) crypto assets and global centralized platformswho are not interested in submitting to any jurisdiction, and even less to Argentina, and 3) crypto assets and decentralized platforms, which once put into operation simply work without intervention or subjection to human will.

“Recognizing these three universes, the regulator should establish friendly and reasonable rules to try to bring the largest number of centralized crypto assets and platforms to the first group, because there they can be better supervised for the benefit of users and all kinds of criminal investigation,” he added.

On the other hand, it maintains that “regarding those who remain in the second group, the law must provide affected users (when there are, of course) the claim against all those who in some way profit or benefit from their operation, regardless of where they are, and what relationship they have with the creators of those crypto assets and platforms. The third group, that of crypto assets and decentralized platforms, where bitcoin and other protocols in different degrees of development and decentralization are mainly found, should be left out of all regulatory claim, so that users can operate at their own risk and profit.”

NVC

The industry maintains the need not to be treated as a Capital Market. “Not projecting regulations in this sense would mean ignore the particularity of this new sector of the economy, and treat it with notoriously inadequate tools”, they concluded from Bitcoin Argentina.

While the debates on this issue continue, the US and other countries do not know very well how to treat this nascent industry, especially in relation to the tax part. Even recently, the North American country proposed that the cryptocurrency brokers they would have to communicate information about users’ digital asset sales and transactions.

This rule is part of a broader attempt by Congress and regulators to crack down on cryptocurrency users who may be failing to pay their taxes.

According to him Treasury Department, a new form is proposedand tax return called Form 1099-DA to help taxpayers determine if they owe taxes and prevent cryptocurrency users from having to do complicated calculations to determine their earnings. It would also subject digital asset brokers to the same disclosure rules as digital asset brokers. other financial instruments, like bonds and stocks, the Treasury said. Until now, the governments have been running from “behind” and the greatest difficulty lies in the own nature of a sector that is free and decentralized.