A glance to the colombian cryptocurrency market

By: Jairo Morales Vecino

The Colombian cryptocurrency market has shown a tendency towards growth and expansion. $70.000.000.000 monthly crypto-transactions prove so, ranking Colombia as the tenth country with highest crypto-transactions, and seventh in Bitcoin-related operations.  Consumers and investors are expressing increased interest in cryptocurrencies and innovations such as blockchain. Some investors, fintechs, and venture capital funds are beginning to commit steadily, even consolidating investment plans under the assumption that cryptocurrency is the future of money. This is turning into an opportunity that both banks and digital platforms can take advantage of, considering the accelerated change that digital banking is experiencing in Colombia.

Despite that cryptocurrencies have not been regulated in Colombia, and that the Central Bank (Banco de la República) has officially reiterated that crypto-transactions are deemed to be performed at users´ own risk, the Colombian Government has recently published a short term yet ambitious plan to study its convenience and security for consumers. That is why the Superintendence of Finance decided to launch a pilot (laArenara) for selected supervised financial entities and negotiation platform (9 alliances in total) to: i) learn about the day-to-day reality of this newly born market; ii) identify strategies to mitigate money laundering and illegal financing risks; and iii) guarantee high cybersecurity standards and consumer protection. This probationary stage is divided in five main phases: application, selection, structuring, monitoring and feedback. The idea is that by implementing the pilot, the Government could access strategic data about banks and consumer behavior to issue new and responsible regulation on the matter.

Colombia`s rising appetite for cryptocurrencies is evidenced not only through the referred banking-platforms alliances (mainly for cash-in and cash-out transactions), but through recent guidelines issued by the Superintendence of Companies, authorizing shareholders to contribute to their company`s capital through cryptocurrencies, as intangible assets under the modality of in kind contribution pursuant to Articles 126 and subsequent of the Colombian Code of Commerce.

Certainly, despite that there is still no certainty on how stringent the cryptocurrency regulation would be passed in Colombia, as the experimental pilot is planned to go on for one more year, the truth is that recent data shows that Colombian consumers are willing to enter into this risk-based market, creating a comfortable environment for crypto-platforms under a definitive regulatory framework, a scenario that seems to be around the corner.