A transactional tax established in 2001 puts the Argentine crypto wallet ecosystem at risk, creating disadvantages compared to traditional financial institutions like banks. The industry expects President Milei to rectify this measure, but that has not happened yet.
Argentine Crypto Wallet Providers in Disarray as Tax Puts Local Players in Checkmate
The Argentine crypto industry, including exchanges and wallet providers, is currently facing a challenging situation due to a tax established in 2001. The “debit and credit tax,” which imposes a 1.2% duty on each cryptocurrency transaction, has put local providers at a disadvantage compared to traditional financial institutions and international crypto giants.
In 2021, the cryptocurrency industry applied for a reduction in this tax, successfully obtaining a reduced rate of 0.075% due to its links to the internet industry.
However, recent reports indicate that a revision from ARCA, the Argentine tax agency, could determine that the full tax may apply to these industry players, putting them at risk. This would be disastrous for the industry, as these rates are higher than the transaction fees they charge.
Additionally, the retroactive application of this tax to local operations would spell doom for many, forcing them to close their doors due to an inability to pay these taxes.
Unnamed sources claim that President Milei was ready to sign an executive order fixing this issue, which would be in line with the libertarian and anti-tax policy of his administration, but this was ultimately scrapped due to his participation in the Libra scandal.
Read more: The Libra Incident: Examining Argentine President Javier Milei’s Confusing Token Endorsement and Its Destructive Aftermath
The Argentine Fintech Chamber recently called for eliminating this tax, as it discriminates between banks and crypto providers and hinders the industry’s growth.
It stated:
In a context in which we seek to promote free competition between currencies and assets, maintaining this discrimination solely for the purpose of operating with virtual assets goes against the model of the country we want to build.
The coming months will be crucial in determining whether this will become a breaking point for local crypto industries or if the government will lift this tax to alleviate the risks faced by the industry.
