• For security exchanges to be legal, they must have commercial businesses in the country.
• Users must be informed about potential risks when trading in cryptocurrencies on crypto platforms.
• They are also required to take security precautions to stop money laundering or other criminal acts.

Colombia has begun to create a regulatory framework that allows cryptocurrency trading. The bill is being debated in Congress. It was passed in its first reading by the Sixth Committee of the House of Representatives.

Three additional legislative steps must be completed before the bill can be sent to President of the Republic for its promulgation or entry into force. Although there has not yet been a regulation framework, crypto trading and cryptocurrency exchanges are permitted by Colombia’s government.

Since the beginning of last year, the Colombian Financial Superintendence (SFC) launched a pilot plan in which Binance and Davivienda, the country’s largest bank, participate, along with other financial companies that work in alliance with national and foreign exchange platforms.

A pilot project combining traditional banks and DeFi firms aims at analyzing the pros and cons of cryptocurrency operations. This includes withdrawals and deposits. It is under the oversight of the Colombian regulator.

“We have to say that the processing of this project has been quite difficult,” legislator Mauricio Toro, one of the proponents of the bill, told the newspaper La República.
He said that the initiative “opens up to talking about innovation and alternative markets, as well as a number of other elements that remain unknown to many.”

Crypto Platform Operations Requirements

According to the content of the legal instrument under discussion, encryption platforms must establish a commercial company domiciled in Colombia or a branch based in the country, if it’s a subsidiary of a foreign company.

It is essential that exchanges offer their customers high-security standards for hacking, theft, and other threats to the operations of their deposits. Effective prevention measures must be taken to prevent criminal activity, such as laundering money.

Additionally, the bill establishes a Single Registry of Cryptoactive Exchange Platforms. (PIC), so companies from the sector can be incorporated in the Colombian Chamber of Commerce.

The regulations for crypto platforms require that their users are informed about both the potential risks and the requirements they have to meet in order to access their services.

Flipside

• A majority of Colombians are positive about cryptocurrency and would consider using digital currency in their daily trading activities.
• According to Coinspaid, another 35.8% said they’d like to purchase cryptocurrencies with higher security guarantees.

According to the European Exchange’s report, respondents emphasized the importance of regulations and details about discounts, promotions and special services that businesses accepting cryptocurrencies might offer.
Resolution 314, an ordinance passed by the Financial Information and Analysis Unit, December last year. This resolution will become effective on July 1. It mandates that crypto platforms report every operation worth over US $150.

This allowed DIAN, the National Tax Agency (DIAN), the ability to ask taxpayers to disclose in their balances the cryptos-related operations of the previous year.

What You Need to Care About

• On June 19, the next president of Colombia will be elected between Gustavo Petro (left), a critic of cryptocurrencies, and Rodolfo Hernández (center right), who has only said that is losing value.

“The next president will play a decisive role in the adoption of policies that seek to strengthen the appropriation of cryptocurrencies,” said the country manager of Buda.com in Colombia, Alejandro Beltrán.

He said that voters will be able form part of the market’s positioning based upon the technological advancements currently occurring.
Whichever wins, the other will be keen to impact Congress’ cryptocurrency legislation before it becomes law.

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