Argentina Mulls Inclusion of Proof-of-Solvency Requirements in Crypto Regulation – Argentina’s government is prepared to implement a set of severe regulations that crypto firms must follow in order to operate in the country. According to Bloomberg, the national securities regulator (CNV) is considering imposing proof-of-solvency requirements on institutions that handle cryptocurrency deposits for third parties.
According to CNV president Sebastian Negri’s words, the current law would be focused on the activities of exchanges rather than the classification of crypto and tokens. Negri also stated that this regulatory framework will be implemented gradually, although he did not confirm the inclusion of proof-of-solvency requirements.
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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.”
A proof-of-solvency report certifies that an exchange or crypto company has the quantity of cryptocurrency it claims to have by directly looking at its funds in the blockchain and certifying that the funds are sufficient to cover the liabilities the company presents to its clients.
The inclusion of such a measure in the impending Argentine crypto law would aim to avoid a situation similar to that of FTX, formerly one of the largest cryptocurrency exchanges, which filed for bankruptcy last year, leaving its users 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.”
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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.