Home Latest Insights | News Javier Milei Confirms He will Shut Down Central Bank of Argentina; Kraken vs SEC and $3.1m Coin Transaction Fees

Javier Milei Confirms He will Shut Down Central Bank of Argentina; Kraken vs SEC and $3.1m Coin Transaction Fees

Javier Milei Confirms He will Shut Down Central Bank of Argentina; Kraken vs SEC and $3.1m Coin Transaction Fees

In a shocking announcement, Argentina’s President Javier Milei confirmed that he will shut down the Central Bank of Argentina (BCRA) as part of his radical economic reforms. Milei, who took office in November 2023 after winning a landslide victory on a libertarian platform, said that the BCRA has been a source of inflation, corruption and financial instability for decades and that it is time to end its monopoly on money creation.

Milei’s plan is to replace the BCRA with a free banking system, where private banks and financial institutions can issue their own currencies backed by gold, silver, cryptocurrencies or other assets. He said that this will create a competitive and sound monetary system that will protect the purchasing power of the Argentine people and foster economic growth and development.

The BCRA is the central bank of Argentina, being an autarchic entity that promotes monetary and financial stability, employment and economic development with social equity. It was established in 1935 and has a history of intervening in the exchange rate market to stabilize the economy and currency. It has a 100% state ownership and a presidentially appointed board of directors.

Tekedia Mini-MBA edition 14 (June 3 – Sept 2, 2024) begins registrations; get massive discounts with early registration here.

Tekedia AI in Business Masterclass opens registrations here.

Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.

Milei also said that he will abolish all capital controls, currency restrictions and exchange rate regulations that have hampered the free flow of money and trade in Argentina. He said that he will allow the peso to float freely in the market and that he will not intervene to manipulate its value. He said that this will restore confidence in the peso and attract foreign investment and tourism to Argentina.

How will this affect Argentina’s economy?

The effects of Milei’s proposal on Argentina’s economy are hard to predict, as there is no precedent for such a radical change in monetary policy. However, some possible scenarios are:

If the free banking system works as intended, Argentina’s economy could experience a boost in productivity, innovation and competitiveness, as private banks would provide more efficient and diverse financial services to consumers and businesses.

The peso would stabilize and appreciate in value, as it would reflect the market demand and supply of money. Inflation would decrease, as money creation would be limited by the assets backing each currency. Argentina’s economy could become more integrated with the global market, as capital flows would increase, and trade barriers would be eliminated.

If the free banking system fails or faces difficulties, Argentina’s economy could suffer a severe crisis, as private banks would face insolvency, fraud or runs on their currencies. The peso would lose its credibility and value, as it would compete with multiple currencies with different qualities and prices.

Inflation would skyrocket, as money creation would be uncontrolled and unpredictable. Argentina’s economy could become more isolated and vulnerable, as capital flows would decrease and trade disputes would arise.

Milei’s announcement was met with mixed reactions from different sectors of society. Some praised his bold and visionary move, saying that it will liberate Argentina from the tyranny of central banking and usher in a new era of prosperity and freedom. Others criticized his reckless and irresponsible decision, saying that it will plunge Argentina into chaos and hyperinflation and destroy its financial system and economy.

Milei said that he is aware of the risks and challenges of his proposal, but that he is confident that it will succeed and benefit the Argentine people in the long run. He said that he is ready to face any opposition or resistance from the political establishment, the media, the international community or any other group that may try to stop him. He said that he is determined to make Argentina the first country in the world to adopt a free banking system and to prove that it is a viable and superior alternative to central banking.

Kraken VS SEC and $3.1m transaction fees

In a recent statement, Kraken, one of the largest and oldest cryptocurrency exchanges in the world, announced that they are facing a lawsuit from the U.S. Securities and Exchange Commission (SEC) over their alleged violation of securities laws. The SEC claims that Kraken has been offering and selling unregistered securities to U.S. investors, namely certain digital assets that the SEC considers to be investment contracts.

Kraken strongly denies the SEC’s allegations and asserts that they have been complying with all applicable laws and regulations. They argue that the SEC’s approach is inconsistent, unclear, and harmful to the innovation and growth of the crypto industry. They also accuse the SEC of overreaching its authority and imposing its own views on what constitutes a security, without providing clear guidance or due process.

Kraken’s CEO, Jesse Powell, said in a tweet that they will “vigorously defend” themselves against the SEC’s “unfounded and misguided” lawsuit. He also urged the crypto community to stand together and resist the SEC’s attempts to stifle the development of decentralized technologies. He said that Kraken is not afraid of a legal battle and that they have the resources and the resolve to fight for their rights and their customers’ interests.

The lawsuit is the latest in a series of actions that the SEC has taken against crypto companies in recent years. The SEC has sued several other exchanges, such as Coinbase, Bitfinex, and Poloniex, as well as crypto projects, such as Ripple, Telegram, and Kik, for allegedly violating securities laws. The SEC’s stance has been criticized by many in the crypto space as being hostile, arbitrary, and outdated.

The outcome of the lawsuit could have significant implications for the future of crypto regulation in the U.S. and beyond. It could also affect the availability and accessibility of certain digital assets for U.S. investors. Many crypto enthusiasts are hoping that Kraken will prevail in court and set a precedent for a more favorable and sensible regulatory framework for crypto.

Someone paid $3.1m for a single Bitcoin transaction.

Bitcoin, the most popular cryptocurrency in the world, has seen a surge in value and activity in recent months. The price of one bitcoin reached an all-time high of over $68,000 in November 2021, and the network processed more than 300,000 transactions per day on average.

However, not all transactions are equal. Some are more expensive than others, depending on the size, complexity and urgency of the transaction. The fee that a user pays to send a bitcoin transaction is determined by the supply and demand of the network’s limited space. The more congested the network is, the higher the fee.

On November 22, 2023, someone paid a staggering $3.1 million for a single bitcoin transaction. This is the highest fee ever paid for a bitcoin transaction, according to blockchain data provider BitInfoCharts. The previous record was $2.3 million, paid in April 2021.

The transaction in question was a complex one, involving 3,490 inputs and 3,490 outputs. Each input and output add to the size of the transaction, which affects the fee. The transaction was also sent with a high priority, meaning that the user wanted it to be confirmed as soon as possible by the network.

The reason for this expensive transaction is not clear. It could be a mistake, a deliberate act of generosity, or a sophisticated operation that required such a large and urgent transaction. Some speculate that it could be related to a ransomware attack, a money laundering scheme, or a tax evasion strategy.

Whatever the motive, this transaction shows the volatility and unpredictability of the bitcoin network. While some users enjoy low fees and fast confirmations, others may have to pay exorbitant amounts or wait for hours or days for their transactions to go through. This poses a challenge for the adoption and usability of bitcoin as a global payment system.

No posts to display

Post Comment

Please enter your comment!
Please enter your name here