Latam Insights: Milei Wins Runoff Election, Vows to Eliminate Central Bank in Argentina; Drex to Encourage Tokenization

Welcome to Latam Insights, a compendium of Latin America’s most relevant crypto and economic news during the last week. In this issue: Libertarian Javier Milei wins the runoff election in Argentina, reinforcing his intention of eliminating the central bank. Also, the digital real may encourage the tokenization of assets in Brazil, and the Brazilian senate could approve a bill to tax cryptocurrency purchases using foreign brokers.

Javier Milei Wins Runoff Election, Reaffirms Intention of Ending the Central Bank in Argentina

Libertarian Javier Milei has become president-elect of Argentina after defeating current Economy Minister Sergio Massa in a runoff election last week, obtaining 56% of the popular vote. Milei’s campaign includes proposals to make the state leaner by eliminating a significant chunk of the ministries and the Central Bank of Argentina, which he considers a “scam.”

These actions will also involve the dollarization of the country, a measure focused on reining in the country’s inflation, which has registered yearly numbers of over 140%. After being elected, Milei’s office issued a statement clarifying that he was committed to closing the central bank after rumors indicated he had changed his stance.

Milei’s office explained:

Given the false rumors spread, we wish to clarify that the closure of the Central Bank of the Argentine Republic is not a negotiable matter.

President of the Central Bank of Brazil: Digital Real to Bring New Business Models

Roberto Campos Neto, president of the Central Bank of Brazil, has discussed the possibilities the digital real (drex) will bring for business and financial transactions. In recent statements, Campos Neto explained that the programmability of drex will allow the development of many applications that can’t use today’s bank rails.

He declared:

We have programmable payments, greater speed [of payments], peer-to-peer transfer, transparency, and increased security, with technology very different from what we have today.

Furthermore, Campos Neto emphasized the significance of the tokenization of assets, which will allow the trading of goods to be registered using drex’s system without needing a public notary to certify the transaction.

Brazilian Senate Might Approve a Foreign Crypto Purchases Tax

The Committee of Economic Affairs of the Brazilian Senate has recently approved a bill that taxes cryptocurrency purchases processed through foreign exchanges. Bill 4,173/2023 establishes that cryptocurrency purchases on exchanges abroad will be subject to a 15% fee.

According to analysts, this bill is focused on exchanges that operate in the country but are not directly taxed because their operations happen abroad and will be effective when customers exchange their crypto assets for Brazilian reals. The bill needs to be approved by the Senate plenary and sent for presidential sanction to become law.

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