Home
News
- Colombia’s 2020 crypto-trade volume of $31.1M already touched $40M in Q1 2021 alone.
- Jehudi Castro says banning crypto would be pointless.
- Where previously, the Colombian government tried to deny crypto’s existence, they are now trying to change their minds.
The raging crypto-adoption by the Colombian population stresses the national government; worried due to the rising number of cyber scams, the regulators are devising new rules.
In an interview with the crypto-specializing news site, CoinDesk on Friday, Jehudi Castro, adviser digital transformation at the Presidency of Colombia, said the Columbian government couldn’t just “stand by and do nothing;” such scale of crypto activity demands carefulness.
The Cryptocurrency Rage
According to the Chilean crypto exchange Buda.com, where last year Colombia’s trade volume was $31.1 million, it has already touched $40 million in 2021’s first quarter alone. Alejandro Beltrán, co-founder and country manager at Buda.com, cites 2021 as their “best year ever.”
Going by Chainalysis’ 2020 global crypto adoption index, after Venezuela, Colombia is the fastest-growing crypto market in the region and ranked 9th worldwide. The same year, the Finland-based Bitcoin (BTC) marketplace, LocalBitcoins, recognized Colombia as the world’s third-largest market by trading volume.
Reviewing Regulatory Stance On Crypto
2020 witnessed the regulatory environment slowly but surely adapting around crypto, as the government took notes. While expanding its fintech regulatory testing environment, or sandbox, to include crypto-startups, regulators issued crypto tax guidelines and anti-money laundering (AML) regulations. Regulators are still wary of the seemingly unstable market, yet the recent measures aren’t overly restrictive. According to Castro, banning crypto would be pointless. What the government needs “regarding crypto regulations” is a transparent exchange of “data and information” regarding the transactions.
Pilot Project To Devise Better Regulations
In January, Colombia’s financial custodian, the SFC, allotted nine crypto firms the task to test banking services for crypto platforms under a yearlong pilot project starting March. Out of the 14 applicants, the 9 selected firms include Bancolombia partnered with Gemini, Davivienda bank partnered with Binance, and Buda and Bitso with Banco de Bogotá. In this union, the banks won’t deal with cryptocurrencies “directly,” said Beltrán. Selected “crypto firms” will “work together with the government and regulated banking institutions” to help the government gather data for implementing regulations, added Castro.
Colombia’s AML Regulatory Upgrade
The National Superintendency of Corporations published a circular in December, discussing AML guidelines for financial institutions that follow the money laundering intergovernmental organization, the FATF’s specified rules.
Castro, a member of the sandbox’s evaluating committee, highlighted the need for exchanges to implement in-test risk management of “money laundering and terrorist financing,” “operational risk and cybersecurity,” and “consumer protection measures.” Similar to the current e-commerce dealings, the sandbox allows citizens to partake in crypto-operations “within high-security standards and adequate risk management.” Beltrán states the local crypto industry was long since prepared for AML regulations, at least five years. Previously, it was “a voluntary system,” it now must be integrated “by the rules of Colombia.”
Recalling Government vs. Crypto?
The Colombian government has always tried to deny crypto’s existence, but it can’t anymore. With crypto becoming “a global phenomenon,” they “can’t deny the existence” and are “trying to change their minds,” said Beltrán. In 2018, the nation’s lack of regulatory clarity around crypto shut down several Buda.com held accounts, and the financial authorities didn’t ask to get them back online, relayed Beltrán.
Crypto Future: The Ultimate Solution
Sandbox is paving the way for a legal framework that doesn’t hinder the crypto or DeFi space’s evolution. Additionally, working with the World Economic Forum (WEF), the government also plans to use blockchain to fight corruption, remarked Castro. Recollecting their journey through all the “bad and good,” Beltrán said, they are “on the good side” now.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
