The Argentine Judicial General Prosecutor’s Office recently approved the registration of a company with cryptocurrency as its registered capital, making it the first of its kind in Argentina and Latin America. This article is sourced from Aiying and compiled, translated, and written by ForesightNews.
(Background:
Argentina’s Anti-Inflation Strategy: Ceasing the Issuance of Pesos! Is Bitcoin Enthusiast President Milei Embracing BTC Reforms?)
Table of Contents:
Company Registration Process and Legal Innovations
Description of the Registration Process
Regulation of Virtual Asset Service Providers in Argentina
Main Content:
1. Registration Obligation
2. Registration Exceptions
3. Registration Requirements
4. Advertising Obligations
Implementation Timeframe
Multiple Advantages of Argentina’s Move
Other Countries Supporting the Use of Cryptocurrency as Company Capital
Switzerland
Singapore
Estonia
Malta
Liechtenstein
Cayman Islands
Hong Kong
Bermuda
The Argentine Judicial General Prosecutor’s Office (IGJ) recently approved the registration of a company using cryptocurrency as its registered capital, marking a historic first in Argentina and Latin America. The company used Bitcoin and USDC as its initial capital, totaling approximately $500.
This innovative move not only signifies the first official application of cryptocurrency in Argentine corporate capital but also indicates the country’s recognition and acceptance of emerging digital assets within its legal framework.
The first company registered in Argentina using cryptocurrency as capital had an initial capital consisting of 0.00457621 Bitcoin (BTC) and 195 USDC, with a total value of nearly $500. The entire registration process is outlined as follows:
According to Argentina’s Companies Act (LGS), the value of all assets must be accurately calculated in transactions involving capital. Typically, when a company uses non-cash assets such as land or real estate as capital, an audit by an accountant is required to confirm the value of these assets, followed by legal assistance to transfer ownership of these assets to the new company.
However, due to the use of cryptocurrency in this case, the registration process differs. To ensure compliance with the Companies Act, accountants and notaries must be hired to certify the value of cryptocurrency during its transfer and verify the authenticity of the storage and transfer process of these digital assets. Specifically, Bitcoin and USDC are first transferred to custodial wallets of Argentine national registered cryptocurrency exchanges Lemon Cash and Ripio. These exchanges are strictly regulated to ensure the enforceability of these digital assets in a legal sense.
This custodial arrangement complies with Argentina’s legal requirements for company capital, which states that a company’s capital must be seizable or used to repay debts in the event of legal disputes or financial issues. Through this approach, cryptocurrency as part of a company’s capital is legalized and provides protection for subsequent legal procedures.
On March 22, 2024, the Argentine National Securities Commission (CNV) released Resolution No. 994, which aims to register and regulate Virtual Asset Service Providers (PSAV). This move is in accordance with the provisions of Argentine Law No. 25,246 and its amendments regarding anti-money laundering and counter-terrorism financing.
Under the provisions of Law No. 27,739, the CNV is designated as the regulatory body for Virtual Asset Service Providers, responsible for establishing and maintaining a registration system. This system will record all individuals and companies engaged in virtual asset transactions, including exchanges between virtual assets and legal tender, exchanges between virtual assets, transfers of virtual assets, custody and management of virtual assets, and financial services related to virtual assets. The main contents of the law are summarized as follows:
Individuals residing in Argentina or companies registered in Argentina must register in the “Virtual Asset Service Provider Registration System” established by the CNV if they engage in virtual asset-related business.
Non-residents of Argentina or companies registered abroad must also register if they conduct virtual asset-related business within the territory of Argentina.
Registration can be exempted if the total amount of virtual asset transactions does not exceed 35,000 units of purchasing power units (UVA) per month, equivalent to $1,000.
All individuals and companies engaged in virtual asset business must provide detailed personal or company information, including name, address, contact number, website, etc., and must ensure the accuracy and updating of the information.
All registered Virtual Asset Service Providers must indicate on their website or other promotional materials that their registration is solely for compliance with legal obligations and does not imply authorization or regulation of their activities by the CNV.
This resolution came into effect on March 22, 2024, and existing service providers must complete registration within 45 days.
Additionally, the IGJ has established a series of regulations to ensure transparency and accuracy of cryptocurrency in corporate financial reporting. For example, it specifies the valuation method of cryptocurrency and how to correctly record these digital assets in financial statements. These legal regulations not only guarantee the legal operation of companies but also provide investors with more reliable financial information, enhancing market confidence.
Incorporating Bitcoin into social capital has several advantages in the following aspects:
Strategic Financial Advantages: Companies can now utilize the potential appreciation of digital assets as part of their financial strategies. Although Bitcoin has high price volatility, it presents both risks and opportunities. Incorporating it into company capital allows businesses to benefit from its value increase.
Enhanced Attractiveness to Investors: Companies that hold digital assets may be more attractive to investors interested in blockchain technology and cryptocurrencies. This may attract investors who are knowledgeable in technology and focused on cryptocurrencies.
Increased Liquidity and Global Coverage: Cryptocurrencies are known for their high liquidity and ability to facilitate international transactions. By incorporating digital assets into capital, companies can leverage these characteristics to enhance operational flexibility and global reach.
Clear Regulation and Enhanced Confidence: The regulation by the IGJ provides clear guidelines on how to value and report digital assets in financial statements. This standardized approach aims to increase transparency and enhance investor confidence by ensuring consistency in the management and reporting of digital assets. It effectively fulfills the function of a cryptocurrency fund.
Argentina’s decision to include Bitcoin and other digital assets in company capital sets a precedent for other countries and may inspire more countries to adopt similar regulatory measures.
By including cryptocurrency as part of capital in the registration regulations, the IGJ has made a significant update to Argentina’s corporate law. This measure not only promotes the development of the cryptocurrency ecosystem but also introduces a new adoption model, providing a secure and reliable environment for investment and operation of digital assets. This move not only aligns Argentina naturally with international trends but also provides a clearer regulatory environment for companies that incorporate digital currencies into their operations.
Globally, there are several countries and regions that allow companies to use cryptocurrency as part or all of their registered capital, such as:
Switzerland is considered one of the global centers for cryptocurrency and blockchain technology, particularly its famous “Crypto Valley” located in Zug. Switzerland allows companies to register and invest capital using cryptocurrencies such as Bitcoin and Ethereum. Its cryptocurrency-friendly regulatory policies have attracted numerous blockchain startups to register in the country.
Singapore is also a country with an open attitude towards cryptocurrencies. Its laws allow companies to use cryptocurrencies as part of their capital. The Monetary Authority of Singapore (MAS) has clear regulations on cryptocurrencies, enabling companies to utilize digital assets within the legal framework. Many blockchain and cryptocurrency companies choose to register in Singapore due to its relatively relaxed policy environment and legal protection.
Estonia is another cryptocurrency-friendly country. Its e-Residency program allows global citizens to register companies online and use cryptocurrencies as part of their capital investment. Estonia’s innovative laws and digital government initiatives have attracted many international cryptocurrency and blockchain companies.
Malta, known as the “Blockchain Island,” has a legal framework that supports companies using cryptocurrencies as part of their registered capital. The Malta Financial Services Authority (MFSA) has established detailed regulatory requirements, allowing blockchain and cryptocurrency companies to operate legally in the country and use digital assets as capital.
Liechtenstein is a small country in Europe, but it has advanced regulations on cryptocurrency and blockchain technology. Liechtenstein’s Blockchain Act allows companies to use cryptocurrencies as capital, and the legal framework is clear, ensuring that companies can legally include digital assets in their financial structure.
The Cayman Islands, as an offshore financial center, has also started to accept cryptocurrency as part of company capital in recent years. Its lenient policies and low-tax environment attract many cryptocurrency and blockchain companies to register there.
Hong Kong is a major financial center and has adopted a relatively open attitude towards cryptocurrencies. Although there is no explicit provision like Switzerland allowing the use of cryptocurrency as registered capital, in practice, some companies in Hong Kong have already started fundraising and incorporating capital in the form of cryptocurrencies.
Bermuda is very cryptocurrency-friendly, with the government actively promoting the application of blockchain technology and allowing companies to use cryptocurrency as registered capital. Bermuda’s “Digital Asset Business Act” clarifies that companies can use digital currencies for capital registration.
The practices of these countries or regions are similar to Argentina’s situation, legalizing cryptocurrency within existing legal frameworks and incorporating them into company registration capital.
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