Argentina is weighing a significant overhaul of its financial market rules through a proposed Deregulation Bill that would place digital assets, tokenization and decentralized technologies at the center of the country's financial modernization agenda. The preliminary draft, prepared by Deregulation Minister Federico Sturzenegger, sets out reforms aimed at incorporating blockchain-based financial instruments into Argentina's regulatory framework and widening the range of investment opportunities available in the market.

The proposal arrives as Argentina continues to grapple with triple-digit annual inflation and persistent peso devaluation, conditions that have already driven widespread public adoption of cryptocurrencies as a store of value and medium of exchange. Latin America more broadly has emerged as an active region for digital asset regulation, with El Salvador having adopted Bitcoin as legal tender and Brazil implementing a comprehensive crypto regulatory framework in 2022.

The proposal is still in draft form and may be revised before it is submitted to Congress. Even so, it indicates the government's intention to bring Argentina's financial regulations closer to emerging digital finance practices while encouraging innovation across capital markets.

One of the most prominent provisions would permit investment funds to allocate capital to digital assets, as long as those investments are consistent with each fund's stated investment policy and are approved under rules established by the National Securities Commission (CNV). Industry observers have said the measure could open demand worth billions of dollars for eligible digital assets by allowing greater institutional participation in the sector.

A source familiar with the proposal, cited by local media, said cryptocurrencies are increasingly being recognized as investment assets and that it is therefore appropriate to allow regulated investment funds to hold them in their portfolios. The same source stressed that such participation would remain under CNV supervision and would not create unrestricted access to every cryptocurrency or allow fund managers to acquire digital assets without regulatory authorization.

Tokenization and Blockchain Integration

The draft legislation also outlines a broad framework for tokenizing negotiable securities. Under the proposal, financial instruments could be issued, transferred, held in custody and traded through decentralized technologies, rather than depending solely on traditional market infrastructure.

The bill would authorize the tokenization of negotiable securities and formally recognize decentralized technologies for issuance, custody, transfer and trading. The measure is intended to increase the efficiency, speed and cost-effectiveness of Argentina's capital markets. Supporters of the initiative say blockchain-based processes could simplify settlement procedures, lower administrative costs and support more efficient financial operations for investors and other market participants.

Another key provision concerns the use of digital assets as collateral. The proposal would allow cryptocurrencies such as Bitcoin and other qualifying digital assets to secure loans, enabling lenders to accept blockchain-based holdings as backing for credit facilities. Such a framework could expand access to financing for cryptocurrency holders whose assets are primarily stored in digital form rather than in conventional financial instruments.

Smart Contracts Receive Legal Recognition

The draft bill would also extend legal recognition to smart contracts, potentially allowing a range of agreements to be executed directly on blockchain networks. Agreements involving property rentals, mortgages and other legal arrangements could be created and administered through automated digital systems.

The proposal would grant full legal recognition to smart contracts, enabling automated execution of agreements, payments, redemptions and certain enforcement procedures through blockchain technology without routine judicial intervention. By recognizing programmable contracts, the government aims to create a legal basis for automated financial and commercial transactions while reducing dependence on manual administrative processes.

If enacted, these measures could change the way contractual obligations are performed by allowing blockchain-based systems to automatically carry out predefined actions once contractual conditions are satisfied.

The proposal has not yet been formally introduced in Congress. However, it reflects the administration's broader strategy of promoting market-oriented reforms and incorporating decentralized technologies into Argentina's evolving financial framework. The draft also aligns with earlier policy initiatives under President Javier Milei that seek to modernize the country's regulatory environment and encourage innovation in financial services. If approved through the legislative process, the bill could place Argentina among the countries seeking a more comprehensive legal framework for digital assets and blockchain-powered financial markets.