• Many countries of the region have made great strides in establishing regulations.
• Others, such as Bolivia have chosen to avoid crypto operations altogether and banned them.
• Latin America does not have a single, comprehensive regulation framework that regulates cryptocurrency.

Chainalysis has revealed that Latin America has seen a remarkable growth in cryptocurrency adoption over the last three-years. To prevent this from happening, governments have adopted different regulations to regulate the industry.

The legislators from the countries that have seen the greatest growth in the use and adoption of digital assets are presenting different bills for approval and discussion. It is not possible to have a comprehensive and common regulatory framework in place for cryptocurrency within the region.

In 2017, the market value of cryptocurrency reached more than 3 billion dollars. The market grows as fiduciary currency devalues with inflation and does not fulfill all users’ needs.

These are the current regulatory procedures in Latin American countries as of March.

Argentina

The country will likely increase its regulations regarding BTC and other cryptocurrency very soon. This sense was promoted by Marcos Cleri and Liliana Schwindt, both members of Frente de Todos. A bill has been submitted. It is still being debated.

Deputy Ignacio Torres, Todos por el Cambio presented the other bill regarding digital assets. It is backed by several exchange companies. More recently, the IMF asked the Argentine government to take measures to “discourage” the use of cryptocurrencies, as part of the debt agreement signed with the credit organization.

Argentina is unique in that it doesn’t have a regulation framework for cryptocurrency, but has already implemented fiscal control of virtual assets. Exchanges and Payment Service Providers must report transactions to the Tax Body (AFIP).

Operation with cryptos will also have to pay Income Tax but not VAT since it does not fit into one of the tax groups. It is based upon the fees charged by exchanges that they have to collect it.

Bolivia

It was also the first country in the region that banned cryptocurrency. 2014. The Central Bank of Bolivia approved Board Resolution 044/14 banning the use of any private cryptocurrency assets that were not issued or controlled by the government.

According to the regulator, there was no adequate regulation in place for cryptocurrency operations. Due to Ponzi scams and other frauds, Pay Diamond was notified by the BCB about the potential risks associated with cryptocurrency operations.

Bolivia has not been involved in cryptocurrency trading since that time. Multiple BCB resolutions, statements and resolutions confirm that there will be no ban on cryptocurrency trading.

Brazil

Four bills have been filed to regulate cryptocurrency. All four bills have been introduced to regulate cryptocurrencies. The goal is to fight money laundering and any other criminal acts that are associated with digital asset. These legal proposals are also intended to help users by implementing the Consumer Protection Code.

No. 3825 presented by Senator Irajá Abreu of the Social Democratic Party unifies all the other proposals previously presented. This proposal aims to establish a transparent marketplace where money laundering and tax evasion are prevented.

Brazil could become the biggest regulator in Latin America, if this bill which promotes mining using clean energy sources and doesn’t charge taxes to environmental miners is approved.

Colombia

A regulatory sandbox was approved by the Financial Superintendence of Colombia last year for cryptocurrency businesses. In view of crypto’s rapid growth, the government supports the regulation, promotion, and study of this industry. This is why a document with guidelines was released that the public sector must adhere to in order for it to be adopted.

The regulatory sandboxes are controlled areas where pilot testing of unregulated business models takes place. Financial Superintendence of Colombia believes that there are learning opportunities for both the crypto industry as well as the government, with the goal of improving this activity.

The Financial Information Analysis Unit, (UIAF), approved Resolution 314 last December. Exchanges now have to report daily operations for their clients. Binance recently began pilot trials with several banks in the area.

As of April 1, any transactions with Bitcoin that exceed US $150 have to be reported to the agency. This rule is subject to fines of up to 400 dollars and 100 to 150 minimum wages for non-compliance. Colombia has a minimum wage of COP 1,0,000,000 ($260).

Chile

Senator Karim Bianchi introduced the Bitcoin bill in November. It aims to establish a reliable and secure crypto environment for all players. It protects both users and businesses in the crypto currency sector.

The Central Bank of Chile will have responsibility for crypto asset regulation, according to the bill. These regulations are intended to improve the Financial Analysis Unit’s ability to fight criminal activity, money laundering and other crimes.

To offer quality products to customers, cryptocurrency service providers must be trained.

Ecuador

The Central Bank of Ecuador plans to regulate cryptocurrency transactions in the coming months. Its general manager, Guillermo Avellán, said that the regulatory framework will seek to avoid the risk of crimes related to cryptocurrencies such as scams and money laundering.

This regulatory framework will be developed by the issuing authority. The Monetary Board will review it once it’s complete. Ecuadorian officials also stated that they don’t plan on converting BTC into legal tender like El Salvador. They do admit, however that this must be regulated by the State.

El Salvador

The country was first to approve a law for the regular operation of Bitcoin (BTC), as legal tender. In September 2021, the Bitcoin Law was approved. It allows merchants and consumers to purchase and sell bitcoin-payable goods and services.

The legal instrument establishes that the BTC – US dollar exchange rate will be set by the market itself. Salvadorans may pay their taxes in bitcoins. However, withholding agents will need to be able accept digital currency.

A package of additional regulations covers the whole crypto ecosystem, in addition to the Bitcoin Law. They include the Regulations of the Bitcoin Law (Bitcoin Trust Creation Law) and the Technical Standards that Facilitate the Participation of Financial Entities within the Bitcoin Ecosystem.

The legislators also approved Guidelines for Authorization of Operation of Technological Platform Services With Bitcoin and Dollars, and Temporary Technical Nos. on Cybersecurity Measures and Identification of Clients In Digital Channels.

The entire economic and financial policy of President Nayib Bukele’s administration revolves around Bitcoin. He has been criticized by financial institutions such as the International Monetary Fund, and even the United States government for his decision.

Mexico

Mexico approved Fintech Law in 2018 as part of the Law to Regulate Financial Technology Institutions. This law requires the Bank of Mexico (Bomex) to establish a framework of regulation for crypto and the link it has with the financial system.

Banks and financial institutions are prohibited from passing on the risk or operations of crypto assets to their end-users. Blockchain technology cannot be used to perform activities that are not part of the financial system.

The law doesn’t restrict service providers using cryptocurrencies. To avoid being criminally involved, they only have to register in the Tax Administration System.

A regulatory body that governs cryptocurrency trading has yet to be established. Banxico will soon launch the CBDC and it could be operational by 2024.

Panama

There have been three bills in the isthmus to regulate digital assets. Gabriel Silva’s proposal to regulate Ether (and Bitcoin) is one example. It establishes cryptos as an alternative payment method that can be accepted by any business.

The Panamanian Congress bill 696, which recommends regulation of BTC and other digital assets, such as NFT tokens and 7UT tokens, was also presented by the Cenobia Vargas, the deputy Cenobia.

Previously, the alternate deputy Rolando Rodríguez had presented another bill to regulate digital currencies. Trade and Economic Affairs Commission in Panama must determine whether or not to combine these bills and then choose which one for consideration and approval by the National Assembly plenary.

Paraguay

A bill to regulate crypto-related operations was approved by the Paraguayan Senate in December. It was proposed by Senator Fernando Silva Facetti from the Authentic Radical Liberal Party along with two Hagamos lawmakers.

This bill will ensure the financial, legal and fiscal security for all commercial transactions involving digital assets. If it is approved cryptocurrency companies must register with Registry of Virtual Asset Providers.

The bill doesn’t recognize cryptocurrency as legal tender but it considers mining to be an innovative digital sector that could receive incentives from the state. The proposal needs to be approved by both the Chamber of Deputies as well as the government before it can become law.

Peruvian legislators are currently discussing the Draft Framework Law for the Commercialization of Crypto Assets. The proposal presented by the deputy José Elías Avalos of the Podemos Peru party proposes two fundamental points.

The creation of a public register of crypto service providers. On the other, the obligation of companies to report all “suspicious operations” to the Financial Intelligence Unit.

According to the bill, Peru will also not accept Bitcoin as legal tender.

Uruguay

It has become more common to use cryptocurrencies in Uruguay. To create a unique regulatory framework in the crypto sector and to allow ample debate about its merits, the Uruguayan Chamber of FinTech established the Cryptocurrency Commission.

BCU, the Central Bank of Uruguay announced it would be studying this issue in a special working group. At the end of last year, a document entitled “Conceptual framework for the regulatory treatment of Virtual Assets in Uruguay” was published, in which he outlined his conception of the future regulation of the sector.

The document defines digital assets as a “digital representation of value or contractual rights that can be stored, transferred and traded electronically using registry technologies”.

Everything indicates, however, that regulations would not apply to virtual assets, but only services related. This will ensure that attention is shifted to the trading activities and crypto-active companies.

Venezuela

In 2018, Venezuela approved the Constituent Decree of Crypto Assets. This was the beginning of its regulatory process. Venezuelan authorities wanted to regulate cryptocurrencies but they also began generating them.

Bitcoin mining was undertaken to avoid the US sanctions for violating the Venezuelans’ human rights. The government of Nicolás Maduro has tried in this way to keep the country’s dilapidated socialist economy afloat.

He also created Petro with Russia’s advice, which was the first state-issued cryptocurrency. While the token was meant to link with the oil price, in fact it is now a digital currency that’s price can be arbitrarily determined by the government via the central banking.

Venezuela’s regulatory body for cryptocurrency is the National Superintendency of Crypto Assets and Related Activities, or Sunacrip. Its mandate is to supervise all crypto asset operations. The organization is also responsible to manage control systems, policies, and user registration.

The Comprehensive Registry of Cryptoactive Services (Risec) is required to be registered by users and businesses in the industry. It’s attached to the regulatory agency. The Integral Registry for Miners (RIM) is required to register cryptocurrency trading and mining services.

In February 2018, the National Assembly approved the Large Financial Transactions Tax Law. This law covers crypto currencies. The tax on cryptocurrency operations is between 2% and 20 percent.

EMAIL NEWSLETTER

Get the other side of crypto!

Upgrade your inbox and get our DailyCoin editors’ picks 1x a week delivered straight to your inbox.

[contact-form-7]
With just one click, you can unsubscribe at any time.

Continue reading on DailyCoin