Colombian Congress Debates Bill to Regulate Cryptocurrency Exchanges
2022.06.09 21:31
Colombian Congress Debates Bill to Regulate Cryptocurrency Exchanges
- To operate legally, security exchanges must establish commercial companies domiciled in the country and strengthen their platforms against hacking.
- Crypto platforms must inform users about the risks of trading cryptocurrencies.
- Likewise, they are obliged to adopt security measures to prevent money laundering and other crimes.
Colombia is moving towards the creation of a regulatory framework for cryptocurrency trading with the bill that is currently being discussed in Congress and was approved in first reading this week by the Sixth Committee of the House of Representatives.
Before being sent to the presidency of the republic for its promulgation and entry into force, the bill must pass another three legislative steps. Despite not having a regulatory framework yet, cryptocurrency trading and exchange operations in Colombia are allowed by the government.
Since the beginning of last year, the Colombian Financial Superintendence (SFC) launched a pilot plan in which Binance and Davivienda, the country’s largest bank, participate, along with other financial companies that work in alliance with national and foreign exchange platforms.
The pilot plan in which traditional banks and DeFi companies converge seeks to analyze the advantages and disadvantages of cryptocurrency operations, basically deposits and withdrawals, under the supervision of the Colombian regulator.
“We have to say that the processing of this project has been quite difficult,” legislator Mauricio Toro, one of the proponents of the bill, told the newspaper La República.
He explained that it is “an initiative that opens the door to talk about innovation, alternative markets and a series of elements that are still unknown to many.”
Requirements for the Operations of Crypto Platforms
According to the content of the legal instrument under discussion, encryption platforms must establish a commercial company domiciled in Colombia or a branch based in the country, if it’s a subsidiary of a foreign company.
Exchanges must strive to offer users high security standards against theft and hacking for their operations and deposits. As well as implementing effective prevention measures to avoid criminal activities such as money laundering.
The bill also establishes the creation of a Single Registry of Cryptoactive Exchange Platforms (PIC) so that companies in the sector are incorporated into the Colombian Chamber of Commerce.
Crypto platforms are required to inform their users about the risks of trading cryptocurrencies and other digital assets, as well as the access requirements to their services that they must meet.
On the Flipside
- Two out of three Colombians look favorably on cryptocurrency operations and would be willing to adopt digital money in daily trading activities.
- Another 35.8% say that they would like to buy with cryptocurrencies if the government guarantees them higher levels of security, according to a study by Coinspaid.
According to the report of the European exchange, “respondents prioritize the aspect of regulation and information about promotions, discounts and exclusive services that businesses that accept cryptocurrencies could offer.”
In December of last year, the Financial Information and Analysis Unit (UIAF) enacted Resolution 314, which will come into force on July 1, to force crypto platforms to report all operations worth more than US $150.
This has allowed the national tax agency (DIAN), to request certain taxpayers to declare in their balance sheets the operations with cryptos of previous years.
Why You Should Care
- On June 19, the next president of Colombia will be elected between Gustavo Petro (left), a critic of cryptocurrencies, and Rodolfo Hernández (center right), who has only said that Bitcoin is losing value.
“The next president will play a decisive role in the adoption of policies that seek to strengthen the appropriation of cryptocurrencies,” said the country manager of Buda.com in Colombia, Alejandro Beltrán.
“Voters will be able to form part of the positioning of this market, based on the current impact that it entails in technological development,” he added.
Whichever one of them wins, they will surely want to influence the cryptocurrency bill that Congress is discussing before it is enacted.
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