Argentine Securities Regulator Blocks Peso Stablecoin Operations

The institution reported that argt, a peso-linked stablecoin, constitutes a security, subject to the regulatory regime for capital markets for these instruments. The stablecoin, issued by Twin Finance and listed by Belo, offered up to 32% APR.

Regulator Classifies Argentine Peso Stablecoin as a Security, Blocks Operations

The Argentine equivalent of the SEC, the CNV, executed the first measure against a stablecoin linked to the national fiat currency, the Argentine peso.

On March 12, the institution issued a resolution ordering the suspension of the listing, offering, and intermediation of argt, stating that the token was classified as a security offered to investors without complying with the rules established for these assets.

The action comes after Belo, an exchange that listed the stablecoin, offered up to 32% in APR, introducing a return promise linked to holding the virtual asset. As a consequence, the CNV assessed that this would make it “fall under the figure of an investment contract included in the definition of negotiable security provided for in article 2 of Law No. 26,831 of the Capital Market, which results in its classification as a negotiable security subject to the public offering regime.”

The institution clarified that when these assets meet the criteria of an investment contract, “an investment of money in a joint venture with the expectation of obtaining profits derived primarily from the efforts of third parties,” it can be considered a security, and will be subject to the compliance regime described for these assets.

The action also affects Twin Finance, which will have to suspend any activity, including the offering of securities, without the CNV’s authorization.

The development sets a precedent in Argentina, linking the offering of rewards for holding a stablecoin to its classification as a security, closing the potential savings use case for these instruments in the future, with no regulation tackling this issue.

The subject of stablecoin rewards is also being discussed in the U.S., as banks have opposed it, alleging that it could fuel deposit flight from the financial system and affect their credit intermediation-based business model.

FAQ

• What recent action did Argentina’s CNV take regarding a stablecoin?
  The CNV suspended the listing and intermediation of argt, classifying it as a security being offered without regulatory compliance.
• Why was argt classified as a security?
  The token was categorized as a security because it was linked to an investment contract promising up to 32% APR for holding the virtual asset.
• What implications does this resolution have for Twin Finance?
  Twin Finance must halt all activities involving the stablecoin, including offering securities, without prior authorization from the CNV.
• What broader impact does this decision have on stablecoin offerings in Argentina?
  This action sets a precedent by linking rewards for holding stablecoins to their classification as securities, potentially limiting their use for savings in the country.