17 Oct 24 The CNV submits to public consultation the draft of the regulation of PSAV

By Agustín L. Cerolini, Martín Chindamo and Valentina Circolone

By means of General Resolution No. 1,025 (hereinafter, the “Resolution”), published in the Official Gazette on 17 October 2024, the Argentine Exchange Comission (hereinafter, the “CNV”) submits to public consultation the regulation and conditions under which Virtual Asset Service Providers (hereinafter, the “PSAV”) shall provide their services, based on the principles and parameters defined in article 38 of Law No. 27,739.

First of all, the Resolution imposes the obligation of registration, so that all individuals or legal entities that carry out activities or operations as PSAVs in Argentina must register in the ‘PSAV Registry’ set up by the CNV (hereinafter, the “Registry”). Exempt from the obligation to register in the Register are (i) PSAVs that carry out activities or transactions that do not exceed an amount equivalent to 35.000 UVA per calendar month; (ii) those persons who exchange virtual assets for legal tender or between virtual assets in their personal capacity; and (iii) those who receive virtual assets as consideration for the sale of products or services.

On the other hand, the Resolution establishes five categories of PSAV according to the activities they carry out: (i) exchange between virtual assets and legal tender, (ii) exchange between one or more forms of virtual assets, (iii) transfer of virtual assets, (iv) custody and/or administration of virtual assets, and (v) participation in and provision of financial services related to the offer and/or sale of virtual assets. With respect to human persons, it is clarified that they may only engage in activities falling under the first two categories.

Furthermore, in order to ensure the solvency and protection of users, PSAV must have a minimum net worth which varies according to the category in which it is registered. If the PSAV is registered in more than one of the existing categories, it must comply with the minimum net worth requirement corresponding to the most demanding category.

In addition, the Resolution establishes a series of requirements and obligations that PSAV must comply with during the term of their registration, such as having a Procedures Manual, informing the CNV about the IT systems used, implementing cybersecurity measures, performing an annual external systems audit, appointing a Regulatory Compliance Officer, drafting a Code of Conduct, complying with PLAFT regulations, submitting information periodically to the CNV’s platform and keeping the documentation for a minimum of 10 years, among others. Failure to comply with any of these will give rise to the application of the sanctions established in Chapter I of Title IV of the Capital Market Law No. 26,831.

On the other hand, it is established that the PSAV, before any fact or event of any nature that affects or may affect the proper exercise of its activity, must refrain from operating as such without prior notice and report the situation as a ‘Relevant Event’.

In turn, the Resolution indicates that the CNV may cancel the registration in two cases: (i) at the request of the PSAV; or (ii) by revocation of authorisation, in the exercise of its supervisory, regulatory, supervisory and sanctioning powers.

Finally, certain specific deadlines are established for PSAVs to submit the information and documentation required in the Resolution after entry into force.