The Rainbow Exchange platform that apparently promised very high returns in dollars and in which thousands of Sampedrinos operate (or believe they operate) through the mysterious Knight Consortium is not registered with the National Securities Commission (CNV)the body in charge of keeping the registry of virtual asset service providers (PSAVs) authorized to operate in our country.
Scams in the financial world
A basic principle to keep in mind in the financial world is that the higher the “promised” return, the greater the risk.
Any firm promise to ensure very high financial returns enters the realm of very risky and warrants suspicion of the existence of possible fraud or scam.
In the case of Rainbow Exchange apparently The promised returns in dollars bear no relation to the alternatives that exist in the various financial markets.
As references to consider, a fixed term in dollars of 30 days in an Argentine financial institution you can pay about 1% annually. The US treasury bills, supposedly the safest fixed income asset on the planet pays 4.63% annually within 90 days. At the other extreme, some of the riskiest fixed income assets on the planet, Argentine dollar bonds (and other markets such as Ukraine or Sri Lanka) that have an average maturity of 3 years They yield about 20% annually (if one buys them today and does not sell them until they expire).
Apparently the platform that operates in San Pedro offered monthly returns that cannot be obtained annually with the riskiest financial alternatives in force.
Numerous platforms that operated and operate cryptocurrencies (and other assets) in the world and in Argentina, promising high returns in dollars, have ended up going bankrupt, leaving a trail of victims.
Some risks of the regulated financial universe
Obviously there are different types of risk. In the Argentine financial system generally if the money is deposited in a financial entity supervised by the Central Bank (BCRA), in a savings bank or in a fixed term, the (low) risk that the saver assumes is that that entity will have difficulties in returning those deposits, in which case there is insurance that currently covers up to 25 million pesos per person, account and deposit.
Simplifying, and if the saver seeks to obtain greater profitability (with the greatest associated risk) You can turn to agents that operate in the capital market, regulated by the CNVinvesting in products called fixed income, public and private bonds; variable income, shares; or so-called collective investment products such as mutual funds that group together several similar financial assets in the same instrument. Investing in these assets carries market risks, such as that the price of that instrument may drop, and that when the saver needs to sell it, he or she must assume a loss.
All these operations in the traditional financial world are strongly regulated by the BCRA and the CNV. who are responsible to investors for any behavior that deviates from the regulatory framework.
Some risks of the less regulated financial universe. Cryptoassets
In the global financial world, 15 years ago, a new universe of non-traditional virtual financial instruments called cryptoactives emerged with force.. Its main banner, bitcoina cryptographic asset (this is protected by complex algorithms that are difficult to decipher) based on a network with high degrees of decentralization called blockchain, was growing in its degree of adoption worldwide, giving rise to the development of a huge and diverse ecosystem, where hundreds of exchanges (markets) operate globally, buying and selling thousands of crypto assets of various types.
Around or based on bitcoin, a parallel (crypto) financial system was created that ended up almost millimetrically replicating the functioning (and tricks) of the traditional financial system that it was supposed to improve.
The difficulty on the part of States to supervise these cryptoassets that can be traded online from anywhere on the planet anonymously or quasi-anonymously generated a gigantic challenge. for all the financial regulators on the planet who were surprised and overwhelmed by these new technologies.
From the point of view of its operation, blockchain technology allowed these assets to be transferred quickly at any time of the day (24 x 7) to and from any place on the planet. In this sense, the appearance of cryptoassets (called stable) linked to currencies such as the dollar (very popular among Argentines seeking to become dollarized) also challenged and evidenced the heaviness of the traditional financial system when making international transfers.
Crypto in Argentina. The regulation that comes
The need to protect ourselves from the high inflation experienced in recent decades, capital controls and the enormous quality and quantity of human capital that our country has made that millions of Argentines constituted our country as one of the highest levels of product development and adoption of cryptoassets worldwide. According to Chainalysis, Argentina is ranked 15th among the countries with the highest adoption of these instruments.
Due to the new regulations approved this year by Congress and began to be regulated by the National Securities Commission Any natural or legal person who wants to offer virtual assets to the public must register with that body.
While the BCRA still prevents financial institutions and payment providers with payment accounts from offering virtual assets, The CNV authorities have publicly indicated that they will soon advance in the regulation of this market, putting new rules for consultation that aim, among other objectives, to protect investors.
The challenges that the CNV faces in regulating this matter are enormous. They range from the opaque price formation of these assets, the anonymity of the participants, the difficulties of auditing very complex technologies, to the custody of cryptoassets that may be located in distant tax havens..
Likewise, the new regulatory framework must take into account the proliferation of cybercrimes linked to the crypto universe. In this sense, various prosecutor’s offices in the country, despite their scarce resources, are training and have achieved concrete results in investigations.and the one headed by Alejandro Musso in the Specialized Fiscal Unit in the Investigation of Cybercrimes (UFEIC) can be highlighted.
The events that occurred in San Pedro and other towns in Argentina in recent years highlight the importance of regulating these assets more closely while making decisive progress in the financial education of the population..
Carlos Weitz
Former president of the National Securities Commission. Professor of Cryptoactives at the University of Buenos Aires
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
