Canada    FinTech Guide    Chapter 15    Colombia

15. Initial Coin Offerings (ICOs)
Colombia  Colombia

There are many reservations from the Colombian authorities. Yet, cryptocurrencies are getting very popular in Colombia.

Existing regulation does not prevent from investing in these cryptocurrencies but still there many issues surrounding this new ecosystem which are uncertain and unclear.

Colombian Government stated that it is up to each person to know and assume the risks involved in this business.

Legal Affairs

There is no regulation on ICOs and the issuance of cryptocurrencies in Colombia. Restrictions There are no explicit restrictions on ICOs or the issuance, distributions and transfer of cryptocurrencies in Colombia. Yet, cryptocurrencies are not recognized nor supported by the Colombian State nor are they part of a centralized, controlled or monitored system. In addition, the Colombian Central Bank, as monetary, credit and exchange authority in Colombia, stated the following:

  1. The only monetary unit in Colombia is the Colombian peso (bills and coins) issued by the Colombian Central Bank.
  2. Bitcoin or similar cryptocurrencies are not legally recognized in Colombia. Therefore, they do not constitute a means of payment of legal tender with unlimited liberating power. There is then no obligation to receive it as a means of compliance with obligations.
  3. Cryptocurrencies cannot be used for exchange market transactions.

In addition, the Colombian Finance Superintendency stated that the entities subject to its surveillance (e.g. commercial banks) do not have authorization to guard, invest, distribute or intermediate with cryptocurrencies. As per Colombian authorities, cryptocurrencies generate serious risks mainly related to consumer protection, money laundering, tax evasion and financial stability.

Licence and costs: There is no specific license in Colombia that will allow an entity to issue an ICO. In any case, please note that an ICO may be considered as a criminal activity. As per Colombian Criminal Code, if a person or entity collects money from the public in a massive and habitual way without the prior authorization of the competent authority, it will be imprisoned from one hundred and twenty (120) months to two hundred and forty (240) months, and a fine of up to fifty thousand (50,000) Colombian legal monthly minimum wages can be imposed.

Token classification: In Colombia, cryptocurrencies have not been recognized as currencies by the legislator or the monetary authority. Therefore, they do not constitute neither (i) currency/payment instructions, nor (ii) securities, nor (iii) investment products under Colombian law.

Prospectus: There is no obligation to publish a prospectus due to the fact that there is no regulation. Therefore, these activities in the financial sector are not allowed in Colombia.

AML/KYC: Cryptocurrencies are not legally recognized in Colombia. Therefore, the assessment of the risk by AML/KYC are not legally required.

Further comments: Cryptocurrencies are taking a giant step in Colombia. For the moment, the national control bodies warn of the risks to which all those wishing to enter this business model are exposed.The financial superintendent, reported in September that the entity was studying, in conjunction with the Colombian Central Bank and the Ministry of Finance, if cryptocurrencies should be regulated or not. Yet, there is no sign of these types of currencies are in the process of being regulated.

Economic Conditions

Even if there is no regulation, cryptocurrencies are taking a big step into Colombian Economy. It has been stated by the National Tax Authorities and Citi Research that cryptocurrencies have spiked up the economy and are about 2% of Colombia´s GDP.

The sales of cryptocurrencies have taken place online and most websites have an international IP address, therefore no known transactions are taking place in Colombia.

Contributing Authors

Parra Rodríguez Abogados S.A.S.

Alvaro Parra Gómez
Bogota, Colombia

Bernardo Rodríguez Ossa
Bogota, Colombia

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Chapter Index:

1. Payment Services / Mobile Payment

2. Asset and Portfolio Management

3. Consulting and Broking Services / Robo-advisory / Auto-trading

4. Trading Platforms / Social Trading Platforms / Signal Following

5. Crowdfunding / Crowdinvesting / Crowdlending

6. Virtual Currency - Bitcoin

7. Loan Services / Factoring / Loan Broking / Finetrading

8. Online Banking Services

9. Analytics and Research / Data Management / Risk Management

10. Accounting

11. Identification

12. Online-pawning

13. InsurTech

14. RegTech

15. Initial Coin Offerings (ICOs)

The information in this guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: 1 May 2018