Argentina has reached an agreement with the International Monetary Fund (IMF) for a $45 billion bailout to ensure the country does not default on its loan obligations. However, the agreement comes with the unusual requirement that the Argentine government take a stand against digital currencies and discourage their use.
The debt deal was first approved by the Chamber of Deputies on March 11 and sent to the Senate for final approval. A week later, the Senate voted 56-13 in favor of the deal. This week, the IMF acknowledged the deal, which it said in a statement “will encourage more sustainable and inclusive growth.”
As noted by the communications director of the Washington-based financial institution, Gerry Rice, the IMF board will meet to discuss Argentina’s request for the debt restructuring program on March 25. .
If approved, the South American country will get a grace period in which its payment will be deferred until 2026. It will also receive nearly $10 billion immediately. Argentina was to pay the IMF $2.8 billion by March 22 and cumulatively pay $39 billion by the end of 2023.
Details of the deal, including the anti-digital currency stance, were set out in a letter of intent signed by Economy Minister Martín Guzmán and Miguel Pesce, the central bank’s president, on March 3. Most of the details are standard, geared towards boosting the country’s economy and making it more resilient.
However, one provision caught the attention of the digital currency community. Under “Building Financial Resilience,” the government pledges to curb the growth of the digital currency industry.
“To further preserve financial stability, we are taking significant steps to discourage the use of cryptocurrencies with a view to preventing money laundering, informality and disintermediation,” he said.
The anti-digital currency provision comes as no surprise since the IMF is not a big fan of digital currency. The organization has issued several warnings about the rise of digital currencies, which it says could lead to economic instability once they become mainstream. Just a few months ago, he claimed in a report that the adoption of stablecoins posed a contagion risk to global financial systems.
The debt deal does not specify how the government will discourage the adoption of digital currency, leaving Argentinian digital currency users unsure of what will happen once the IMF approves the deal.
Some are already challenging the government, saying it is ceding Argentina’s sovereignty to foreign entities by signing the deal.
“It strikes me that the IMF has these kinds of requirements in an agreement with a government, which is a demonstration of the weakness and the concern generated within the IMF by the advancement of new technologies which threaten the hegemony of the dollar as a reserve currency,” Santiago Siri, the founder of the Universal Basic Income blockchain project commented.
Siri further told local newspaper La Nación that the adoption of blockchain and digital currency in Argentina has created thousands of new jobs for many and is helping the country emerge from an economic crisis.
“If the national government accepts a clause of this nature, it can only be described as a servile government, because it would completely cede the possibility to this country to develop sovereignly,” he added.
Argentina has been one of the biggest hubs for digital currencies in the world, with Chainalysis ranking it the 10th largest market. With inflation at record highs, many have turned to digital currencies as an alternative to the peso.
Rodolfo Andragnes, the co-founder of the NGO Bitcoin Argentina, also expressed his opposition to the clause. Describing it as “ridiculously full of lies”, he claimed it didn’t make sense to eradicate digital currencies to combat money laundering.
“It’s like proposing to discourage the use of money. You can prevent money laundering, but [you don’t have to] attacking cryptocurrencies to achieve this are two unrelated things,” he told the newspaper.
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