Canada    FinTech Guide    Chapter 6    Colombia


6. Virtual Currency - Bitcoin
Colombia  Colombia

Some of the warnings made by the Colombian Finance Superintendency is that the transactions on the virtual currencies platforms are anonymous. As per Colombian authorities, cryptocurrencies generate serious risks mainly related to consumer protection, money laundering, tax evasion and financial stability. Buyers or sellers of these virtual currencies are exposed to operational risks, mainly because digital wallets are stolen, as has already happened, and unauthorized or incorrect transactions cannot be reversed. People who deal with virtual currencies are not covered by any type of private or State guarantee, nor their operations are eligible for coverage by deposit insurance. Those who accept virtual currencies in their operations must consider that their acceptance could cease at any time, since people are not legally obliged to trade or to recognize them as a means of payment. There are no mechanisms to enforce transactions with virtual currencies, which significantly increases the possibility of materializing a default risk.



Legal Affairs


There is not yet regulation on virtual currencies in Colombia. In any case, there are no explicit restrictions on virtual currencies in Colombia as well. 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.



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. For the moment, the national control bodies warn of the risks to which all those wishing to enter this business model are exposed. The Colombian Finance Superintendency, reported in September 2017, that the entity was studying, together with the Colombian Central Bank and the Ministry of Finance, if cryptocurrencies should be regulated or not. Yet, there are no signs that these currencies would be regulated soon.



Miscellaneous


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.



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)

Disclaimer:
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