Regulators in Argentina are mulling the inclusion of stringent requirements in their next cryptocurrency regulatory framework. According to reports, institutions like the national securities regulator, the CNV, will be studying the inclusion of proof-of-solvency requirements for exchanges and custody institutions in Argentina, in the wake of the demise of leading cryptocurrency exchange FTX.
Cryptocurrency Exchanges Might Have to Complete Proof-of-Solvency Procedures by Law in Argentina
The government of Argentina is preparing to launch a set of stringent regulations that crypto companies will have to comply with to operate in the country. According to reports from Bloomberg, the national securities regulator (CNV) is mulling the introduction of proof-of-solvency requirements for institutions handling cryptocurrency deposits for third parties.
The regulation that is currently being worked on will be focused more on the activity of exchanges and less on the classification of crypto and tokens, per CNV president Sebastian Negri’s statements. Negri also explained that this regulatory framework will be applied in a progressive way, but did not confirm the inclusion of the proof-of-solvency requirements.
Negri clarified that all measures will be taken in a joint effort with crypto companies in Argentina. He declared:
We will create a working group with the industry to agree on new regulatory parameters, which will include companies that meet the asset and solvency requirements to support the risk they assume.
Proof of Solvency
A proof-of-solvency report registers whether an exchange or crypto company has the amount of cryptocurrency it claims to have, while looking directly at its funds in the blockchain, certifying the funds are sufficient to cover the liabilities the company presents to its customers.
The possible inclusion of this kind of measure in the upcoming Argentine crypto law would have the objective of avoiding a situation like the demise of FTX, formerly one of the biggest cryptocurrency exchanges, that filed for bankruptcy protection last year, leaving its customers without access to their funds.
After this event, other cryptocurrency exchanges made preparations for carrying out similar initiatives voluntarily. This is the case with Binance, Crypto.com, and Kucoin, which were preparing proof-of-reserves procedures. However, the firm responsible for these certifications, Mazars, abandoned such undertakings in December, indicating it would “pause their work with all their crypto clients globally.”
Some national exchanges like Lemon Cash have already stated that they will present this information in the coming days. “The community has lost its trust in cryptocurrency, so we have to get it back,” Lemon Cash’s blockchain manager Francisco Ladino declared.