Crypto Regulations in Argentina
Cryptocurrencies have garnered significant attention in Argentina, especially after Javier Milei, a crypto enthusiast, became the country's president. He has vowed to actively promote the widespread adoption of Bitcoin and aims to dismantle the Central Bank, criticizing it as an institution designed to deceive citizens.
Argentina's new president likely learned from the experiences of his counterpart, Nayib Bukele, to avoid similar setbacks. Cryptocurrency legislation in Argentina has been executed more effectively compared to El Salvador, though it's not without its unique challenges.
Adding to the confusion, activities such as mining (including cloud mining) and staking are completely unregulated. These concepts are conspicuously absent in government circulars, leaving companies in the blockchain and cryptocurrency mining sector in a regulatory gray zone.
How does Argentine legislation define cryptocurrencies?
In Argentina, there's a distinctive lack of a unified national cryptocurrency regulation law. Instead, various governmental bodies independently define and oversee these assets as they see fit.
The primary regulations were crafted by the Financial Information Unit (UIF), the Central Bank of the Argentine Republic (BCRA), and the Federal Administration of Public Revenue (AFIP). The National Data Management Agency (ENACOM), which oversees information security, later joined this regulatory coalition.
Each authority applies its own set of definitions for digital assets:
- The BCRA recognized cryptocurrencies as a "digital representation of value" or a medium of exchange in 2016, and by July 2019, it had issued guidelines mandating crypto-related companies to adhere to KYC/AML standards and grant regulators access to customer personal data and transaction details.
- In June 2020, the AFIP mandated that individuals and companies involved in cryptocurrency operations declare their digital earnings and provide detailed information to tax inspectors. This directive was issued even though virtual assets are not officially recognized as financial instruments, currency, or property.
- A law introduced in 2021 requires cryptocurrency exchanges to register with the National Data Management Agency and comply with the ISO 300/214 information security standard, a regulation that has been in effect since 2014 and primarily concerned credit card issuers.
- In 2022, the AFIP released clarification No. 2-2022, indicating that cryptocurrency holdings are subject to personal property tax for individuals and income tax for corporations.
- In May 2023, the BCRA imposed a ban on payment service providers from engaging in any transactions with virtual assets, significantly hindering the operations of fintech companies.
Hopefully, Javier Milei, an avid Bitcoin supporter, will bring clarity and order to the tangled web of cryptocurrency regulations.
Crypto Taxes in Argentina
Argentina's tax system is notoriously complex, with tax rates varying by region and the source of income (domestic or international).Additionally, taxpayers are categorized into various groups:
This classification includes over 20 categories, making tax declarations for similar incomes vary significantly between groups.
- Permanent residents;
- Residents working abroad for more than a year;
- Foreigners with Argentine residency;
- Foreigners contracted to work in Argentina for over five years;
- Foreign beneficiaries working in Argentina for up to six months a year, among others.
This classification includes over 20 categories, making tax declarations for similar incomes vary significantly between groups.
In simple terms, all cryptocurrency transactions are subject to income tax (Impuesto a las Ganancias), with tax rates ranging from 10% to 15% for Argentine residents and about 35% for non-residents.
The application of capital gains tax (Impuesto a los Bienes Personales) varies based on several factors, including the cryptocurrency's value, ownership duration, and the taxpayer's residency/registration region (for instance, this tax is higher in Buenos Aires than in Santa Cruz province).
Navigating this maze can be challenging even for seasoned tax inspectors, who often confront ambiguous interpretations of the Tax Code regarding cryptocurrencies and widespread avoidance of fiscal obligations. Furthermore, the Tax Reform Law (No. 27-430) does not explicitly define virtual assets or digital currencies.
All the facts mentioned above create legal ambiguity for market participants, who often interpret the regulations to their advantage.
