DLT and cryptocurrencies
FinTechs belonging to this category offer financial services using crypto currencies. This category also includes FinTechs utilising blockchain and distributed ledger technologies (DLT) upon which Bitcoin and Ethereum are based, among others. FinTechs develop and do research in this field in order to create new services – e.g. crypto currency exchange markets, wallet providers, NFTs-related services, new payment services, "smart contracts" or new clearing and settling services.
Attitude of the country towards financial services using crypto currencies
The Central Bank of Costa Rica (CBCR) established that the use of crypto assets in Costa Rica is not prohibited by law, therefore it is allowed. However, the CBCR warned that they do not represent legal tender money so they should not be accepted as a form of payment. This has generated throughout the country the use of these payment methods. There are even records of real estate transactions in the country with the use of crypto assets.
Obligations and requirements to provide financial services using crypto currencies described above
In Costa Rica, the circulation and exchange of crypto assets (as long as they are used for lawful purposes) are permitted activities, as they have not been expressly prohibited by law. Investment in crypto assets would be protected by the principle of freedom (articles 28, 45 and 46 of the Political Constitution), as long as the law does not provide otherwise for reasons of public order. On the other hand, as in other countries (with the recent exception of El Salvador), in Costa Rica crypto assets do not represent legal tender; subsequently, the CBCR does not recommend these to be accepted as a form of payment by citizens.
Thus, although its use is allowed in Costa Rica, whoever wishes to acquire these assets does so at their own risk. Therefore, it is important that those who decide to acquire this type of digital assets are well informed about their characteristics and the risks they entail. A consumer who voluntarily decides to invest his money in them can do so, but the person must be clear that he or she does not have legal instances to seek compensation for an eventual loss of capital caused by the high volatility of these assets.
On the other hand, recently the Ministry of Finance indicated, that under the current legal system, the use of crypto currencies for the payment of tax obligations is not viable. From my perspective, this would not be desirable either, for a financial and, ultimately, fiscal reason. The reason lies precisely in the high volatility shown by the value of crypto assets, compared to legal tender.
Although the information available is limited, so far investments in crypto assets by Costa Ricans appear to be marginal. However, the Central Bank, as well as the National Council for the Supervision of the Financial System (Conassif) and the superintendencies of the financial sector, remain attentive to the evolution of crypto assets in the country in order to determine if at any time they represent a risk to the stability of the financial and payment system or are an obstacle to the implementation of monetary policy.
Additional comments regarding the legal situation for financial services using crypto currencies or what FinTech’s must be aware of in this business area
Market size for financial services using crypto currencies and biggest companies in this business area
The global adoption of crypto currencies among ordinary investors increased in 2021, according to cryptanalysis firm Chainalysis, Costa Rica ranks 75th out of 154 nations analysed related to the global adoption of these assets in the last year.
Additional comments regarding the economic situation for financial services using crypto currencies or what FinTech’s must be aware of in this business area