Colombia Sets Sights on Crypto Regulation

Colombia’s path to cryptocurrency regulation has been a winding one, fraught with legislative setbacks. But César Ferrari, the country’s Financial Superintendent, outlined a new agenda that suggests the government is finally ready to take action. Speaking at the Andicom International Congress of Information and Communication Technologies, held in Cartagena de Indias from September 6-8, Ferrari laid bare the administration’s standpoint on the burgeoning crypto space.

Within the purview of Colombia’s Financial Superintendency (SFC), Ferrari stated that while the institution doesn’t “regulate, it can recommend regulation for virtual assets.” He emphasized that the government aims to establish rules for both the creation of virtual assets and the functioning of cryptocurrency exchanges—designated as Virtual Asset Service Providers (VASP).

Ferrari offered a concise definition of virtual assets, describing them as “a digital representation of value or rights, capable of being used for payment or investment, and which can be created, transferred, and stored using Distributed Ledger Technology or similar.” Going a step further, he stated that a National Registry of Virtual Asset Creators will be set up under the oversight of the SFC to enforce defined regulations for asset creation.

The strategy also outlines strict compliance for exchanges, mandating them to furnish information to authorities under a data protection regime. Additionally, the government will dictate “Environmental, Social, and Governance measures.”

The urgency to define these guidelines, according to Ferrari, is to protect users from the risks posed by the volatile crypto markets, such as illicit activities and scams. He accentuated the need for “comprehensive regulatory policies that are proportional to their risk, size, complexity, and systemic importance, consistent with the economic functions they perform.”

Adding substance to the debate, Ferrari pointed out that Colombia ranks among the top 20 countries in cryptocurrency adoption, according to Chainalysis data. He argued that the country’s objectives are clear: “We seek competition, formalization, innovation, and protection for Colombians.”

This call for regulation comes in the backdrop of multiple failed legislative attempts to control the crypto environment in Colombia. Previous bills, including one as recent as June 2023, have met with archival rather than parliamentary discussion. However, community members of the Colombian crypto space and government representatives are reportedly collaborating on a new proposal.

The consensus is clear: active government participation in crafting the law is pivotal for its approval. Leading organizations like Colombia Fintech and Asoblockchain are already progressing on defining a roadmap. With renewed vigor and a strategic approach, Colombia seems poised to give its crypto-regulatory odyssey a definitive direction.