Regulators in Argentina are considering including stringent requirements in their next cryptocurrency regulatory framework. According to reports, institutions such as national securities regulator CNV will be exploring the inclusion of proof of solvency requirements for exchanges and depository institutions in Argentina after the closure of leading cryptocurrency exchange FTX.
Cryptocurrency exchanges may have to undergo solvency verification procedures under Argentine law
The Argentine government is preparing to introduce a series of strict rules that crypto companies will have to comply with in order to operate in the country. In accordance with reports From Bloomberg, the national securities regulator (CNV) is considering introducing solvency verification requirements for institutions that process crypto-currency deposits for third parties.
According to CNV President Sebastian Negri, the regulation currently being worked on will focus more on the activities of exchanges and less on the classification of cryptocurrencies and tokens. Negri also clarified that this regulatory framework will be applied progressively, but did not confirm the inclusion of proof of solvency requirements.
Negri explained that all measures will be taken in conjunction with crypto companies in Argentina. He announced:
We will establish a working group with industry representatives to agree on new regulatory parameters, which will include companies that meet asset and solvency requirements to support their risk tolerance.
Proof of solvency
The proof of solvency report indicates whether the exchange or crypto company has the stated amount of cryptocurrency, while directly viewing its funds on the blockchain and confirming that the funds are sufficient to cover the obligations that the company imposes on its customers.
The possible inclusion of such measures in the upcoming Argentine cryptocurrency law would aim to avoid a situation similar to the collapse of FTX, a former one of the largest cryptocurrency exchanges that filed for bankruptcy protection last year, leaving its clients without access to their funds.
Since then, other cryptocurrency exchanges have been preparing for similar initiatives on a voluntary basis. This applies to Binance, Crypto.com, and Kucoin, which were preparing reserve confirmation procedures. However, the firm responsible for these certificates, Mazars, backed out of such commitments in December, stating that it would “suspend its operations with all of its crypto clients around the world.”
Some national exchanges, such as Lemon Cash, have already said they will provide this information in the coming days. “The community has lost confidence in cryptocurrencies, so we need to get it back,” said Lemon Cash blockchain manager Francisco Ladino.
What do you think about the possible inclusion of proof of solvency requirements in the upcoming cryptocurrency law in Argentina? Tell us in the comments section below.
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