After FTX, Argentina Will Ask Crypto Companies for Solvency Proof

By CoinUnited.io Research Team

9 Feb 2023

2 min read

According to sources with firsthand knowledge of the situation, the government of Argentina is considering imposing monitoring requirements on crypto exchanges three months after FTX's demise.

People familiar with the matter have indicated that the CNV, the country's local regulator, is considering implementing rules on crypto firms, such as evidence of solvency. While waiting for a vote in Congress that might grant it oversight authority over the crypto industry in the coming weeks, the CNV is making plans.

Exchanges, not tokens, will be the primary target of the next rules. CNV President Sebastian Negri stated in an interview that the regulation will be implemented gradually following the approval of the Congressional measure. Negri avoided answering directly when asked if the agency will require crypto businesses to provide proof of solvency.

Due in part to tight currency regulations and yearly inflation of about 100%, Argentines are among the region's most avid crypto users. According to a source familiar with the situation, the FTX crash had a significant impact on regional users, with some of the biggest crypto exchanges reporting withdrawals of up to 25% of their deposits.

Before a visit by the international money laundering watchdog FATF, which is scheduled for September, Argentina's government is attempting to tighten regulations. According to the sources, officials and regulators are planning to compel crypto firms to meet the same standards as those in the capital markets, including customer awareness, activity transparency, board eligibility, and the reporting of suspicious transactions above $1,000.

According to a court filing, FTX, one of the largest cryptocurrency trading platforms in the world, filed for bankruptcy on November 11 and left behind a trail of creditors totaling over $3 billion. Its bad luck began just days after rumors concerning its solvency began to spread, forcing many users to withdraw their money from it in a panic.

Investors in crypto were prompted by the failure of FTX to call for a more thorough audit of firms' financials throughout the sector. A real-time solution for exchanges would be excellent for the business, according to a blog post written by Vitalik Buterin, co-creator of Ethereum, in November, not long after FTX crashed.

Some businesses have taken preventative steps to reassure customers that their funds are secure despite the low level of government controls as a result of the FTX collapse's loss of confidence.

Ariel Scaliter, co-founder of the startup Agrotoken and director of a postgraduate program in blockchain at Universidad del CEMA in Buenos Aires, said, "I received at least 10 calls at the end of last year from small investors who went bankrupt because they had between $5,000 and $20,000 in cryptocurrencies receiving returns in FTX." As part of the movement toward self-regulation, Lemon Cash, the most popular crypto app in the nation last year, pledged on Thursday to make its "proof of solvency," which details its assets and debts, public. Users of the app may keep track of token deposits and withdrawals in real time.

At a recent corporate event in Buenos Aires, Francisco Landino, director of blockchain at Lemon Cash, remarked, "The community has lost trust in crypto and we must bring it back."

The demonstration of solvency is the most important test that may be done. The CEO of Bitso, Julian Colombo, has stated that the information would be made public regardless of whether or not it is mandated by regulators. Assets must exceed liabilities for any platform to be solvent. When contacted for comment, a representative from the crypto exchange Ripio did not provide it right away.

Exchanges, not tokens, will be the primary target of the next rules. CNV President Sebastian Negri stated in an interview that the regulation will be implemented gradually following the approval of the Congressional measure. Negri avoided answering directly when asked if the agency will require crypto businesses to provide proof of solvency.

Due in part to tight currency regulations and yearly inflation of about 100%, Argentines are among the region's most avid crypto users. According to a source familiar with the situation, the FTX crash had a significant impact on regional users, with some of the biggest crypto exchanges reporting withdrawals of up to 25% of their deposits.

Before a visit by the international money laundering watchdog FATF, which is scheduled for September, Argentina's government is attempting to tighten regulations. According to the sources, officials and regulators are planning to compel crypto firms to meet the same standards as those in the capital markets, including customer awareness, activity transparency, board eligibility, and the reporting of suspicious transactions above $1,000.

According to a bankruptcy petition made on November 11th, one of the world's largest cryptocurrency trading platforms, FTX, has accrued debts of over $3 billion from its creditors. Its bad luck began just days after rumors concerning its solvency began to spread, forcing many users to withdraw their money from it in a panic.

Investors in crypto were prompted by the failure of FTX to call for a more thorough audit of firms' financials throughout the sector. A real-time solution for exchanges would be excellent for the business, according to a blog post written by Vitalik Buterin, co-creator of Ethereum, in November, not long after FTX crashed.

Some businesses have taken preventative steps to reassure customers that their funds are secure despite the low level of government controls as a result of the FTX collapse's loss of confidence.

Ariel Scaliter, co-founder of the startup Agrotoken and director of a postgraduate program in blockchain at Universidad del CEMA in Buenos Aires, said, "I received at least 10 calls at the end of last year from small investors who went bankrupt because they had between $5,000 and $20,000 in cryptocurrencies receiving returns in FTX." As part of the movement toward self-regulation, Lemon Cash, the most popular crypto app in the nation last year, pledged on Thursday to make its "proof of solvency," which details its assets and debts, public. Users of the app may keep track of token deposits and withdrawals in real time.

At a recent corporate event in Buenos Aires, Francisco Landino, director of blockchain at Lemon Cash, remarked, "The community has lost trust in crypto and we must bring it back."

The demonstration of solvency is the most important test that may be done. The CEO of Bitso, Julian Colombo, has stated that the information would be made public regardless of whether or not it is mandated by regulators. Assets must exceed liabilities for any platform to be solvent. When contacted for comment, a representative from the crypto exchange Ripio did not provide it right away.

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