The regulatory process of cryptocurrencies in Latin America

Cryptocurrencies registered significant global growth during 2021 and international organizations, as well as countries, carried out various actions to promote the regulatory process for the use of cryptocurrencies. Latin American countries made significant progress.

One of the most important actions carried out during 2021 was the update of the guide of the Financial Action Task Force (FATF), reaching agreements that allowed defining some procedures, among which the limitation of “P2P operations denying the license of operation to exchanges that allow transactions to or from self-custody wallets”.

For its part, the International Monetary Fund (IMF) was also emphatic, on various occasions during 2021, on the need to regulate cryptocurrencies and in its annual report on global financial stability, it indicated that the cryptographic ecosystem is the second topic of greater world interest in financial matters.

While at the World Economic Forum in Davos, cryptocurrencies were the focus of analysis, establishing some recommendations to countries to “control DeFi platforms (decentralized finance).

Venezuela pioneer in Latin America

The first Latin American country to establish legal regulations for cryptocurrencies was Venezuela in the years 2018-2019, additionally it created Sunacrip, a special regulatory body for crypto assets and their related activities. However, in 2021 some actions were carried out to optimize the regulation of cryptocurrencies.

In April, Sunacrip announced an order in which an adaptation to the legal norms was carried out, taking into account the recommendations made by the FATF. In addition, it made an alliance with the national body against organized crime and terrorism, in order to improve actions against money laundering with cryptocurrencies.

Other Latin American attempts

Argentina exhibited two bills related to the cryptographic sector, in which they proposed a legal framework to legalize Bitcoin as a form of payment, but they failed to be finalized in Parliament. Another third project, was presented in July and aims to legalize the payment of salaries with cryptocurrencies, is in the process of review by the respective parliamentary committees.

Brazil, for its part, approved a bill that they had been discussing since 2015, which includes stricter penalties for scams and money laundering crimes with cryptocurrencies. Additionally, 2 other projects are under discussion in the Brazilian Parliament. One is related to the responsibility of establishing controls on the part of the state. While the second aims to legalize bitcoin for the payment of salaries in the country.

The Financial Superintendency of Colombia began a pilot test in July, which will last 12 months, so that the selected financial entities will carry out transactions and use cases in a controlled environment. The experiment is known as a regulatory sandbox. The financial superintendent notified that at the end of the experiment the users of the participating banks could carry out the sale of cryptocurrencies through their bank accounts.

The world’s first Bitcoin law

In June 2021, El Salvador became the center of attention of the world and particularly of the bitcoin community, due to the fact that President Nayib Bukele announced the adoption of Bitcoin as legal tender in the country, sending a draft law to Congress. that was approved immediately by the parliamentarians.

This event generated various reactions in the global arena and international organizations such as the IMF and IDB spoke out against the measure. Internally in the country, some organizations also expressed their disagreement and some challenges were attempted, but they were unable to advance and prevent the measure. Finally, on September 7, the Bitcoin law came into force, with which the country became the first in the world to adopt a cryptocurrency as legal tender.

M. Rodríguez

With information from specialized cryptocurrency media