Argentina's First Case: Legal Innovation of Bitcoin and USDC as Corporate Registered Capital and Global Practice
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Argentina's First Case: Legal Innovation of Bitcoin and USDC as Corporate Registered Capital and Global Practice
This not only marks the first official application of cryptocurrency in corporate capital in Argentina, but also signals the country's recognition and acceptance of emerging digital assets within its legal framework.
Navigating Web3 tides with focused insightsAuthor: AiYing
Recently, Argentina's Public Registry of Justice (IGJ) officially approved a company using cryptocurrency as registered capital—a historic first not only for Argentina but for all of Latin America. This company used Bitcoin and USDC as its initial capital, totaling approximately $500. Aiying previously covered Argentina’s innovative virtual currency policies and market adoption in earlier articles: [Long Read] Cryptocurrency Market Amid Argentina’s Economic Crisis: Peso Printing Halted, Surging USDT Use, and New Regulatory Landscape Explained, and [Research Report] Deep Dive into Latin America’s 2024 Crypto Market: From El Salvador and Brazil Legalization to Regional Innovation.
Today’s move marks another innovation. This groundbreaking event not only signifies the first formal use of cryptocurrency as corporate capital in Argentina, but also signals the country’s legal recognition and acceptance of emerging digital assets.
1. Company Registration Process and Legal Innovation
1. Registration Process Overview
The initial capital of this first-ever Argentine company registered with cryptocurrency consists of 0.00457621 BTC and 195 USDC, with a total value close to $500. Aiying has outlined the entire registration process: under Argentina’s General Companies Law (LGS), the value of all assets involved in capital transactions must be precisely calculated. Typically, when non-cash assets such as land or real estate are used as capital, an accountant’s audit is required to verify their value, followed by legal assistance to transfer ownership to the newly formed company.
However, due to the use of cryptocurrencies, the registration process differs. To comply with LGS requirements, accountants and notaries must be engaged to certify the value of the cryptocurrencies at the time of transfer and verify the authenticity of the custody and transfer process. Specifically, the Bitcoin and USDC were first transferred to custodial wallets operated by Lemon Cash and Ripio—Argentine-registered crypto exchanges regulated under national oversight—to ensure these digital assets are legally enforceable.
This custodial arrangement meets Argentina’s legal requirement that corporate capital must be seizable or usable to settle debts in the event of legal disputes or financial issues. In this way, cryptocurrency becomes a legally recognized component of corporate capital, providing safeguards for future legal proceedings.
2. New Regulations on Virtual Asset Service Providers in Argentina
On March 22, 2024, Argentina’s National Securities Commission (CNV) issued Resolution No. 994, aimed at registering and regulating Virtual Asset Service Providers (PSAV). This action aligns with anti-money laundering and counter-terrorism financing provisions under Argentine Law No. 25.246 and its amendments.
Under Law No. 27.739, CNV is designated as the regulatory authority responsible for establishing and maintaining a registry system for PSAVs. The system will record individuals and entities engaged in virtual asset activities, including exchanges between virtual and fiat currencies, transfers between virtual assets, custody and management of virtual assets, and related financial services. Below is Aiying’s summary of key aspects of the regulation:
1. Key Provisions
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Registration Obligation:
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Individuals residing in Argentina or companies registered in Argentina conducting virtual asset-related business must register in the "Virtual Asset Service Provider Registry" established by CNV.
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Non-residents or foreign-registered entities operating virtual asset businesses within Argentina must also register.
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Registration Exemptions:
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Entities whose monthly total virtual asset transaction volume does not exceed 35,000 Units of Purchasing Power (UVA), equivalent to about $10,000, are exempt from registration.
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Registration Requirements:
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All individuals and entities engaging in virtual asset activities must provide detailed personal or corporate information—including name, address, phone number, website—and keep it accurate and updated.
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Disclosure Obligation:
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All registered virtual asset service providers must state on their websites or promotional materials that registration fulfills a legal obligation and does not imply authorization or supervision by CNV.
2. Implementation Timeline
The resolution took effect on March 22, 2024. Existing service providers had 45 days from that date to complete registration.
Additionally, IGJ has established a series of rules to ensure transparency and accuracy in how cryptocurrencies are reported in corporate financial statements—such as valuation methods and proper accounting treatment. These legal frameworks not only safeguard legitimate business operations but also provide investors with more reliable financial data, enhancing market confidence.
3. Strategic Advantages of Argentina’s Move
Aiying believes incorporating Bitcoin into corporate capital offers several strategic benefits:
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Strategic Financial Advantage: Companies can now leverage the potential appreciation of digital assets as part of their financial strategy. While Bitcoin is highly volatile, this volatility presents both risk and opportunity—allowing firms to benefit if values rise.
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Increased Investor Appeal: For investors interested in blockchain technology and cryptocurrencies, investing in companies holding digital assets becomes more attractive, potentially drawing tech-savvy and crypto-focused investors.
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Enhanced Liquidity and Global Reach: Cryptocurrencies are known for high liquidity and facilitating international transactions. By including digital assets in capital, companies gain greater operational flexibility and global scalability.
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Regulatory Clarity and Confidence Building: IGJ’s guidelines offer clear direction on valuing and reporting digital assets in financial statements. This standardized approach improves transparency and strengthens investor trust by ensuring consistent management and disclosure of digital assets—effectively fulfilling functions similar to a cryptocurrency fund.
Aiying believes Argentina’s decision to include Bitcoin and other digital assets as corporate capital sets a precedent for other nations and may inspire broader adoption of similar regulatory frameworks globally.
By formally integrating crypto assets into its corporate registration framework, IGJ has made a significant update to Argentina’s corporate law. This step not only advances the development of the crypto ecosystem and introduces a new adoption model, but also creates a secure and reliable environment for investment and operation of digital assets. The move naturally aligns Argentina with global trends while offering clearer regulatory clarity for enterprises incorporating digital currencies into their operations.
4. Other Jurisdictions Supporting Cryptocurrency as Corporate Capital
Globally, several countries and regions allow companies to use cryptocurrency as registered or partial capital, including:
1. Switzerland
Switzerland is considered one of the global hubs for cryptocurrency and blockchain technology, particularly its renowned “Crypto Valley” in Zug. Switzerland allows companies to use cryptocurrencies such as Bitcoin and Ethereum as part of their registered capital. Its favorable regulatory environment has attracted numerous blockchain startups to incorporate there.
2. Singapore
Singapore maintains an open stance toward cryptocurrencies, permitting businesses to include digital assets as part of their capital. The Monetary Authority of Singapore (MAS) provides clear regulations, enabling enterprises to operate within a well-defined legal framework. Many blockchain and crypto firms choose to register in Singapore due to its relatively lenient yet legally sound environment. [In-Depth Visual Guide] Understanding Singapore’s Payment Regulation Framework and DPT License Requirements for Virtual Assets
3. Estonia
Estonia is another crypto-friendly jurisdiction. Its e-Residency program enables global citizens to register companies online and contribute cryptocurrency as partial capital. Estonia’s forward-thinking laws and digital government initiatives have drawn many international crypto and blockchain firms.
4. Malta
Dubbed the “Blockchain Island,” Malta has established a legal framework allowing companies to use cryptocurrencies as part of their registered capital. The Malta Financial Services Authority (MFSA) has issued comprehensive regulations, enabling blockchain and crypto firms to operate legally and utilize digital assets as capital.
5. Liechtenstein
Liechtenstein, a small European nation, boasts advanced regulation of cryptocurrencies and blockchain. Its Blockchain Act permits companies to use crypto assets as capital, with a clear legal framework ensuring digital assets can be legally integrated into corporate financial structures.
6. Cayman Islands
As an offshore financial center, the Cayman Islands has recently begun accepting cryptocurrency as part of corporate registered capital. Its flexible regulations and low-tax environment have attracted many crypto and blockchain companies to incorporate there.
7. Hong Kong
As a major financial hub, Hong Kong adopts a relatively open approach toward cryptocurrencies. Although it lacks explicit rules like Switzerland’s allowing crypto as registered capital, in practice, some Hong Kong-based companies have already raised funds or contributed capital in cryptocurrency form.
8. Bermuda
Bermuda is highly crypto-friendly, with government support for blockchain innovation and allowance for companies to use cryptocurrencies as registered capital. Bermuda’s Digital Asset Business Act clearly permits the use of digital currencies in corporate capital registration.
These jurisdictions, like Argentina, are integrating cryptocurrencies into their existing legal systems, formally recognizing them as acceptable forms of corporate capital.
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