Argentina is set to introduce a new draft bill requiring citizens to declare their cryptocurrency holdings. Otherwise, they could face hefty tax penalties.
Argentina’s new draft bill targets crypto assets
The bill is meant to tighten the country’s anti-money laundering rules and will be presented to the Federal Administration of Public Revenues (AFIP) in the upcoming parliamentary session.
The proposed document encourages citizens to declare their financial holdings, like stocks and crypto assets. Declarations would be voluntary, but failure to declare assets and tokens could result in an investigation by AFIP. If declared within the first 90 days, citizens would be subject to a 2.5% tax rate, those who wait could pay up to 10%. Non-payment penalties will be charged quarterly with an initial rate of 1.5%. Those who hold under $50,000 worth of assets will be charged at a lower initial rate of 1.5%.
The government is attempting to combat drug trafficking and tax evasion as many citizens are amassing “undeclared savings” due to the country’s hyperinflation. This has led many to abandon the fiat peso and turn to cryptocurrencies and overseas real estate investment as stores of value.
The proposed bill has raised serious concerns among the public, with some claiming that it will create an atmosphere of distrust and a lack of privacy. Others are worried that the government will use the law to target those with dissenting political views. However, officials have argued that the bill is necessary to reduce money laundering, increase transparency, and ultimately help the economy.
Inflation in Argentina has boosted crypto adoption
The economic outlook in Argentina is dire, with the annual inflation rate reaching an alarming 90%. In response, citizens have turned to bitcoin (BTC) and other cryptocurrencies as viable alternatives to traditional currency.
Lemon Cash, one of the most popular exchanges in the country, has made Visa cards backed in bitcoin available in the country. This allows individuals to purchase and hold BTC and other major cryptocurrencies while protecting their savings from the unprecedented inflation in the country.
Lemon Cash already issued millions of cards in 2022, showcasing that cryptocurrencies are becoming more viable for citizens to protect their savings in tough economic times. Given the recent move to declare cryptocurrency in Argentina, citizens may gravitate to foreign exchanges or anonymous assets like Monero.