Key Takeaways
- Colombia is working to establish a regulatory framework for cryptocurrency trading, which is currently being debated in Congress and was approved for the first time this week by the House of Representatives’ Sixth Committee.
- The pilot plan, which brings together financial institutions and DeFi companies, aims to assess the benefits and drawbacks of cryptocurrency operations, namely deposits and withdrawals under Colombian regulators’ supervision.
- Crypto platforms must inform their users about the risks associated with trading cryptocurrencies and other digital assets, as well as the access requirements for their services.
Governments and numerous regulatory bodies are assertively trying to analyse and stay up with the fast expansion of the crypto market.
While many policymakers have realised that prohibiting the crypto industry is not an alternative, they have yet to develop a robust structure to monitor and control the emerging market in their native countries.
With a bill presently being debated in Congress and authorised in first reading this week by the House of Representatives’ Sixth Committee, Colombia is edging closer to establishing a regulatory regime for cryptocurrency trading.
In this regard, the Colombian Congress has begun taking a step in the right direction by passing a bill that aims to improve the clarity and security of cryptocurrency exchange operations in the country. Representative Mauricio Toro of the Green Party, one of the bill’s proponents, expressed his thoughts on the development. Toro claims that:
“Colombia must move forward in regulating this legal, multibillion-dollar business, not only to create jobs and opportunities, but also to provide peace of mind to Colombians who can buy their assets safely.”
The Colombian Financial Superintendence (SFC) has been running a pilot programme in which Binance and Davivienda, the country’s largest bank, are participating, as well as other financial firms that collaborate with national and foreign exchange platforms.
Under the oversight of the Colombian regulator, the pilot plan, in which commercial banks and DeFi companies collaborate, aims to assess the benefits and drawbacks of cryptocurrency operations, primarily deposits and withdrawals.
Toro also stated that this bill is intended to protect consumers of these platforms from becoming victims of Scammers.
While Toro is hopeful about the bill’s potential impact, the venture is still in its early stages and will need to be confirmed and introduced as law three more times. Due to the current political situation in Colombia, which is in the middle of an election cycle with a second election round coming up soon, this may take longer than usual.
Encryption platforms must create a commercial company registered in Colombia or a branch based in the country if they are a subsidiary of a foreign company, as per the content of the legal construct under discussion.
If sanctioned in its current form, cryptocurrency exchanges in Colombia will be required to register in order to offer their services, disclosing to their customers the economic advantages, threats, and potential profits of crypto trading. Banks will also allow direct connections between cryptocurrency exchanges and fiat currency accounts, reducing the risk of Ponzi schemes and other pyramid schemes developing.
The bill also creates a Single Registry of Cryptoactive Exchange Platforms (PIC), which will allow companies in the sector to register with the Colombian Chamber of Commerce.
