The Argentina government, through Banco Central de la República Argentina (BCRA), the country’s central bank, has started its investigation on nine fintech companies.
The investigation aims to uncover if the fintech firms are indeed involved in the offering of unauthorized financial intermediation through crypto-assets.
Allegedly, the companies involved in the investigation convert deposits into crypto assets. These crypto-assets are then used to inject funds for both consumer finance and investment and offer a profit as a counterparty.
These firms are suspected by the government of offering interest to their customers in exchange for depositing cryptocurrencies.
BCRA refused to reveal the names of the nine fintech companies under investigation. The central bank also said that it is currently in the process of notifying these nine fintechs.
Argentine law provides power to the BCRA to require the necessary information if a person or entity is allegedly involved in transactions related to financial intermediation.
Financial intermediation is the process of transferring sums of money from economic agents with surplus funds to the agents that are interested to use the funds.
The central bank has also the authority to order immediate and definitive termination of the illegal activity and implement sanctions.
Punishable by law
Under the country’s criminal code, Article 310, any person or company found guilty of being involved with financial intermediation, will face one to four years in prison. Perpetrators will also be disqualified from operating in the country for up to six years.
On top of these punishments, they will also be required to pay fines two to six times the value of the money they used for financial intermediation.