Colombia To Regulate Crypto: Risks & Growth Focus

According to reported by El Colombiano, Colombian authorities have introduced a bill to regulate cryptocurrencies, with a focus on risk management and the growth of the sector.

The report states that Senator Gustavo, together with Congressman Julian Lopez, presented the bill to Congress on 3 March. Similar attempts had been made last year, but were unsuccessful.

About this initiative, Julian Lopez said:

"This bill aims to establish clear rules to create a trustworthy and more attractive ecosystem for investment, ensuring protections for this emerging industry."

The bill details a regulatory framework for cryptocurrency-related activities, with a focus on asset promotion, education, taxation and market monitoring. In addition, it includes measures to combat money laundering, improve investor protection and foster growth in the sector.

The MP also highlighted the new licensing system for VASPs (Virtual Assets Service Providers). If approved, crypto service providers will have to obtain official licences to operate in Colombia, bringing them in line with the regulatory approaches of cryptocurrency-friendly countries.

Colombian lawmakers made it clear that VASPs are not illegal, but they operate in an unregulated environment, which creates uncertainty and exposes crypto users to risks due to a lack of protection procedures.

The Current State Of Crypto In Colombia

Colombia is close to becoming a digitised country and ranks among the top five regions in Latin America for cryptocurrency usage, according to a report from 2024 by Chain Analysis.

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Latin America is the second fastest region adopting crypto and how countries are turning to stablecoins in response to inflation and currency devaluation.

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The report showed that more than 5 million Colombians participate in cryptocurrency trading, with a trading volume of $6.7 million in 2024.

However, serious concerns about fraudulent activity persist in the country. Pyramid schemes, Ponzi schemes and the use of crypto for illegal activities are some of the most common scams.

Colombian regulators have also been considering the adoption of a Central Bank Digital Currency (CBDC). In 2023, the Central Bank collaborated with Ripple to test a digital solution to improve the local payments system. However, the current status of this development is uncertain, as Ripple has withdrawn from the initiative.