Fintech Department Bulletin | Fintech Legal News in Argentina | Edition No. 16.
by Daniel Levi
In this bulletin, you will find a selection of the main legal news related to the fintech and digital banking market in Argentina.
The Central Bank initiates an investigation against fintechs for financial intermediation with crypto
There are 9 companies involved
Last June 11, 2021, the Central Bank of Argentina (BCRA) announced to the public that it initiated an investigation against a group of fintechs that offer its service as a link to finance investment projects using crypto assets as a channel of savings, in order to determine if they are performing unauthorized financial intermediation, which is an activity exclusively reserved to financial entities.
The BCRA informed that the investigation covers nine fintechs that capture deposits, which are converted into crypto assets, especially crypto currency, and thereafter are applied to the financing of investments or consumption, offering retribution.
Based on this communication, it seems that the BCRA is specifically targeting certain platforms that offer users the possibility to perform cash-in, buy crypto assets, and apply them to term investments that promise the payment of interest or profits.
The BCRA also advises that, if it finds clues of unauthorized financial intermediation, it will criminally prosecute the companies involved.
This news was published a few days after the BCRA, together with the National Securities Exchange Commission (CNV), confirmed that the crypto assets are not legal currency nor securities (see below).
Changes in settlement terms for operations with credit cards
Will enter into force on July 1st
Through Communication “A” 7305 dated June 11, 2021, the BCRA amended the term for the settlement of purchases with credit/purchase cards in one payment to merchants by banking issuers.
Up to now, the term had been set in 10 business days for all merchants. However, with this new disposition, settlement terms will be set as follows: (a) 8 business days for micro and small merchants and/or individuals; (b) 10 business days for medium merchants and for hotels, tourism, gastronomy and/or health services not included in (a) above; and (c) 18 business days for all other cases.
As in the past, the regulation clarifies that the terms shall be counted as from the corresponding purchase (though, in practice, this is only possible if the merchant closes the batch with the acquirer).
This way, the reduction of terms will no longer benefit large companies, which again will be subject to the traditional settlement term. Other situations exempted from the above-mentioned terms are purchases in installments (which are generally settled in 48 hours), purchases with debit cards (settled within 72 hours by law), purchases with prepaid cards (governed by market terms), and non-banking issuers.
Assistance and loans to consolidate strategic sectors of the IT Economy
Program to Potentiate the Knowledge-Based Economy
By means of Resolution 309/2021 dated May 28, the Ministry of Productive Development launched the program “Potentiate the Knowledge-Based Economy”, with the purpose of financing projects based on IT activities that aim at creating prototypes, products, or services for the local or international market, or that change productive and/or logistics processes or generate technology platforms, among others.
The Program may finance projects through the grant of subsidized loans and/or non-refundable contributions, up to an amount of AR$150 million.
To this end, during the year the Ministry will make specific bidding calls, which terms and conditions will be published in each opportunity. Potential candidates can be private, public, and mixed companies, universities, technological institutes, business chambers, and other institutions.
The BCRA and the CNV warn about the risks and implications of operating with crypto assets
It is reiterated that they are not currency or securities
Last May 20, after the crypto market suffered an abrupt fall in prices, the BCRA and the CNV issued a joint announcement to warn the public about the risks that should be taken into account when operating with crypto assets.
Besides the usual warnings of security and volatility, from a legal perspective it is interesting to point out the following:
Firstly, the BCRA and the CNV define crypto-assets as “a digital representation of value or rights that are transferred and stored electronically through a Distributed Ledger Technology, DLT, or other similar technology”, which definition is aligned with the idea of “representation of digital value” already adopted by the Financial Information Unit (UIF) in its Resolution 300/2014 and by the CNV in a former announcement published in 2017.
On the other hand, the BCRA and the CNV reaffirmed that crypto assets “are not legal currency nor negotiable securities”, and thus, in principle, should be out of their regulatory scope. This was already said by the BCRA in 2014 and by the CNV in 2017, though in the latter case certain reservations were made that now are not included.
The Tax on Debits and Credits is extended to payment accounts
Treatment is equalized to banking accounts
Through Decree 301/2021 dated May 8, 2021, the Executive Branch extended the scope of the Tax on Debits and Credits in Banking Accounts to “payment accounts” managed by Payment Service Providers (PSP) that are held by legal entities.
To this end, PSPs and companies dedicated to electronic payment services and/or collections on behalf of third parties, are appointed as withholding agents for the settlement and perception of the tax.
Thus, movements of funds in payment accounts shall be subject to the general rate for this tax (0.6%) for each debit and each credit, except if a special reduced rate applies. The tax will not apply to individuals nor for small taxpayers.
In its turn, cash drawings from payment accounts will be subject to a doubled rate, except for individuals and micro or small companies.
As a general principle, up to 33% of the tax may be computed against income tax, as already applies with banking accounts.
In addition, the following exemptions are confirmed:
(i) transfer of funds between accounts of the same person;
(ii) movements performed by PSPs regulated by the BCRA in the development of their activity; and
(iii) on-demand bank accounts used by PSPs to maintain on-demand deposits or to comply with BCRA regulations, and movements destined to comply with the settlement of the tax.
These measures will enter into force on August 1st, 2021.
Court rejects a habeas data class action to prevent the BCRA from collecting personal crypto data
The appeal request was also rejected
As we informed in our last newsletter, a solo practitioner had brought a collective habeas data action in order to prevent the BCRA from requesting banks´ personal information about clients that operated crypto, after it was rumored that the regulator was collecting that information for market research.
Finally, last April 26, the Judge in charge of the 10th National Court on Federal Administrative Contentious Cases rejected the action in limine, mainly for the following grounds: (i) The judge deemed that the plaintiff was not legitimated to represent the class of crypto investors, because there was no homogenous interest and because the habeas data action is intuit persona, and (ii) The plaintiff had not extinguished the administrative instance against the BCRA before bringing the judicial action.
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This bulletin contains summaries of standards that are published and to which we refer. They are in no way complete or imply legal advice. If you require legal advice, please contact us.