Published and draft legislation - Colombia

Regulation on virtual currencies

Draft bill 028/2018, Senate

The Colombian government proposes to regulate the use of virtual currencies in transactions and operations carried out in its territory, and to set out the broad lines for protection, supervision, inspection and monitoring to which these transactions will be subject.

The draft regulation establishes that the use of cryptocurrencies will be subject to the principles of inclusion and innovation, the promotion of private competition, improved protective measures for consumers and fraud prevention.

This broad framework provides for transactions (sale, handling and trading) with cryptocurrencies on the part of specialist entities, known as "cryptocurrency transaction entities", that have previously been authorized by the Information Technologies and Communications Ministry. These entities must have systems for managing anti-money-laundering and financing of terrorism (AML/FT) management systems in place that have been duly approved by the Information and Financial Analysis Unit (IFAU).

The draft also puts forward obligations and measures to ensure consumer protection, such as restrictions on the use of cryptocurrencies handled where there are no disbursement facilities, as well as the duty of providing information about the technical features and risks of using virtual currencies.

Trading, for the purposes of the bill, is defined as buying and selling virtual currencies on a technology platform. Traders, responsible for conducting these transactions, should also be authorized by the Information Technologies and Communications Ministry.

Entities that operate without the proper authorization may be penalized with the removal of their commercial license, their business forcibly wound up, their commercial premises shut down and the imposition of monetary fines. 

Turning to the fiscal impact of using cryptocurrencies, the draft regulation provides for the creation of a tax on transactions with cryptocurrencies (5% of the final transaction), to be paid quarterly. Funds from this tax will be used to create a Reserve Fund for Cryptocurrency Fluctuation, managed by the Treasury and Public Lending Ministry, in order to subsidize those acquiring cryptocurrencies that subsequently disappear from the market.