Proposed bill in Argentina encourages citizens to reveal crypto holdings

Argentina’s Ministry of Economy, the country’s economic policy manager, has drafted a bill to encourage Argentines to declare their cryptocurrency holdings, using the inducement of discounted tax rates.

Aimed at combating money laundering, the “Externalization of Argentine Savings” draft law was introduced by economy minister Sergio Massa, according to a Jan. 6 report by local outlet Errepar.

The bill would require crypto holders to produce an affidavit — a sworn statement identifying the whereabouts of their holdings to the government.

The bill proposes tax incentives to encourage citizens to declare their holdings.

Those who voluntarily declare their holdings within 90 days of the law coming into force would pay just a 2.5% tax on the capital gains of their crypto holdings. This tax rate wouincrease incrementally every 90 days until it reaches 15%, the country’s standard capital gains tax rate.

The bill also aims to encourage Argentines to declare holdings of other financial assets that are subject to capital gains such as fiat currency, shares, stocks, real estate and even furniture.

The proposed law would force both domestic and overseas holdings to be deposited into approved banks either in Argentina or in foreign banks regulated by that jurisdiction’s central bank or securities commission.

The bill will be tabled and discussed in the next parliamentary session.

Related: Argentina’s province to issue US dollar-pegged stablecoin

Emerging markets are a hotbed for crypto adoption, with Argentina rankin13th overall in the 2022 Global Adoption Index from blockchain data firm Chainalysis.

Argentines have been lured to crypto due to high inflation in the country and its ease of use for cross-border transactions. Argentina’s inflation rate almost hit 72.4% in 2022, according to Statista data.