Latam Insights: Crypto Developments in Latin America
This week’s Latam Insights brings you the latest developments in the crypto landscape across Latin America, with significant updates from Argentina and Brazil.
Notably, Argentina has reported a remarkable drop in its inflation rate, coupled with legislative conflict over cryptocurrency taxation in Brazil and a significant crackdown on a crypto exchange in Argentina.
Argentina’s Inflation Rate Sees Historic Low
In an encouraging turn of economic events, Argentina’s inflation rate fell to just 1.5% in May, the lowest it’s been in five years, according to the National Institute of Statistics and Census (INDEC). This decrease represents a notable achievement for President Javier Milei‘s administration, which has implemented libertarian economic policies aimed at revitalizing the nation’s economy without resorting to price controls or conventional strategies like a dollar flotation band.
For context, Argentina’s inflation figure has not been this low since May 2020, a period marked by the impacts of the COVID-19 pandemic that suppressed consumer demand. Milei’s spokesperson, Manuel Adorni, lauded this progress, suggesting that adherence to fundamental economic principles during times of high inflation has contributed to this success.
Brazil’s Cryptocurrency Taxation Controversy
On a different note, Brazil is witnessing a fierce debate in Congress regarding cryptocurrency taxation. Congressman Gustavo Gayer, representing an opposition party, has presented a proposal seeking to counteract changes instituted by President Lula‘s administration concerning crypto taxes. His legislative initiative aims to reverse the termination of tax exemptions for small crypto investors, following what he claims are illegitimate executive actions.
The proposed law, formally known as the Legislative Decree Project to Suspend Normative Acts of the Executive Branch, would impose a flat income tax rate of 17.5% on all cryptocurrency holders. Gayer argues that only Congress has the authority to alter tax regulations, asserting that the executive branch has exceeded its constitutional powers in this area.
Argentina’s Crackdown on HTX Exchange
In a more drastic measure, Argentina has moved to block the HTX cryptocurrency exchange, which is based in Seychelles and has origins linked to China. This action stems from an ongoing investigation into a fraudulent scheme known as ‘pig butchering’, where victims are manipulated into sending money to disguised accounts.
The San Isidro prosecutor’s office ordered the exchange to be blocked due to its non-cooperation during the investigation and its failure to register with local authorities as a virtual asset service provider (VASP).
The inquiry, which dates back to 2022, involves a case where a victim lost $13,000 to a scam that was facilitated by HTX. Local reports indicate that the exchange has been connected to other similar schemes as well.
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