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Argentina's U-Turn on Crypto Regularization in Milei's New Economic Plan

Argentina drops crypto regulation from Milei's reform agenda

Argentina has removed a critical clause on crypto asset regularization from its latest economic reform under President Javier Milei. The original proposal, part of the "Law of Bases and Starting Points for the Freedom of Argentines," aimed to offer a legal pathway for declaring undisclosed crypto holdings. This was to be achieved through a tiered taxation scheme, with rates escalating from 5% to 15% depending on the declaration period.

However, the tech-focused Argentine outlet iProUP reported on January 27th that this asset regulation clause, which also covered other assets like real estate and stocks, was unexpectedly scrapped. Interior Minister Guillermo Francos elucidated the reasoning behind this decision, stating: 

“It delayed the treatment of the initiative in parliament.” 

This sudden reversal from the original plan signifies a significant deviation from Argentina's approach to regulating the cryptocurrency market.

The ripple effects of Argentina's policy reversal on crypto

The Argentine government's backtrack on crypto regulation comes amidst other significant moves in the country's economic landscape. Notably, in December 2023, Foreign Affairs Minister Diana Mondino hinted at potential Bitcoin utilization, although this has not yet materialized. Additionally, a decree passed in the same month allowed debt repayment in non-traditional currencies, indicating a softening stance towards digital assets.

President Milei's election victory in 2023, amidst Argentina's soaring inflation, was partly attributed to his favorable view of Bitcoin, which he once described as:

"the return of money to its original creator, the private sector." 

However, since assuming office, he has remained relatively silent on digital assets.

In another intriguing development, following Milei's decision to devalue the Argentine peso by 50%, the Governor of La Rioja province, Ricardo Quintela, announced plans for a separate provincial currency. This move, which Milei has not opposed, underscores the complex relationship between local governments and national policy on currency regulation in Argentina.