Argentine regulators are continuing to prepare crypto regulations in spite of the fallout from the President Javier Milei-Libra scandal.
They also claim they are powerless to step in to resolve the controversy, claiming Libra sales are beyond its jurisdiction.
Milei-Libra Scandal: Regulators ‘Unable to Intervene’
The Milei-Libra scandal erupted on February 15, when the famously pro-crypto President took to X to seemingly endorse the Libra token. This led to a sudden spike in prices.
Libra coin prices took a similarly fast tumble shortly after, and have experienced high volatility ever since.
The headquarters of the Argentine National Securities Commission (CNV). (Source: Televisión Pública Noticias/YouTube/Screenshot)
Milei deleted the post just hours after it went live. But evidence has since emerged suggesting the Argentine President has previously met with the Libra team.
The issue is complicated by a case from Milei’s past, when he was accused – in the run-up to his election – of helping to promote an alleged crypto scam named CoinX.
Per Infobae, the National Securities Commission (CNV) has “so far chosen not to intervene” in the $LIBRA case, “since the current regulatory framework does not cover the advertising of tokens on decentralized platforms.” An unnamed Argentinian regulatory source told the media outlet:
“The $LIBRA token, at the time of its launch, was traded on platforms licensed in Argentina, such as [the crypto exchange] Lemon. People could only buy it on decentralized platforms or wallets that operate directly on the Solana blockchain network.”
CNV Preparing User Protection Measures
The government has reported that it will “expedite” the “adoption of measures” aimed at “preventing further cases of cryptocurrency fraud that cause harm to investors.”
Regardless, the scandal broke out at an extremely awkward time for the CNV. The regulator is currently rolling out a system of Virtual Asset Service Provider (VASP) licenses for crypto exchanges and wallet operators active in Argentina.
The CNV spent most of last year painstakingly unveiling its VASP registry plans, despite considerable industry pushback.
It claims that it wants to “organize the crypto ecosystem in Argentina.” And it claims that its VASP registry is already 120 companies strong.
The CNV says the move is “a step toward the formalization of the sector.” But the media outlet says the body was “in the final stages” of developing “a new, more detailed regulatory framework” when the scandal broke.
This framework will reportedly see VASPs forced to submit information on their agreements with third parties.
Regulator’s Plans
The regulator will also likely push exchanges and wallet operators to oblige their clients to complete Know Your Customer (KYC) checks.
Additionally, the CNV is set to force crypto companies to provide evidence of their capital reserves. It could also impose minimum net worth caps on Argentinian VASPs.
The unnamed sources said the CNV wants to provide crypto users with “improved transparency and security.”
The body says that Argentina’s regulations “will not affect individual users,” but will instead “focus on companies working in the space.”
Infobae wrote that “estimates” suggest that the number of companies registered in the country could drop sharply once the regulations come into full force.
Its sources added that the CNV’s regulations will likely come into effect by the end of this year.
The media outlet concluded by remarking that the Milei-Libra scandal “highlights” the “lack of regulations on the promotion of digital assets in decentralized networks, and its impact on the local markets.”
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