Colombia's banks "take over" cryptocurrency regulation, lawmaker says

Key facts


  • For the legislator, the current regulatory sandbox “is applied as the banks want it to be”.

  • “The industry grew fast and regulators were asleep at the wheel,” said another speaker.

Mauricio Andres Toro Orjuela, a member of the Colombian House of Representatives for the Green Party, claimed that banks seek to control the cryptocurrency sector in Colombia. According to his vision, this activity faces “tax and legal barriers created by the State” in the country.

Congressman Toro Orjuela expressed his views in a panel during the Blockchain Summit Latam

in which also participated the consultant Juan Llanos and the researcher of the University of Brussels Andrés Chomczyk. The moderation was in charge of Mauricio Tovar.

In his interventions in the talk, the legislator assured that in Colombia “the banks have a gigantic power and everything is remaining in their power”. With respect to the current regulatory tests and projects to legislate on cryptocurrencies, he considered that the banking sector “is putting a very hard hand” to gain interference in decision-making. “They want to bankarize a system that is totally contrary to traditional banking,” he said.

Cryptocurrencies in Colombia

Cryptocurrency trading is an incipient economic activity, but with great strength in Colombia. In this regard, the legislator detailed that Colombia is the second nation in Latin America with a higher adoption rate, and is also among the first seven in the world in this regard.

This interest is also reflected in everyday reality. Currently, Toro detailed, in Colombia there are 680 businesses that accept payments with cryptocurrencies, “and we must give them a free hand to these operations”.

“The state should not put up barriers,” he opined, arguing that many people operate on platforms outside the country and that, in this way, Colombia ceases to perceive “a lot of money.” “We cannot allow these barriers because they drive away investment and close the possibilities for citizens to choose where and how to invest their assets,” he said.

As a positive aspect of the debate on cryptoassets that is taking place in Colombia, Toro said that today the banks want to understand the mechanism of operation of cryptocurrencies. What is happening in El Salvador with the entry into force of the bitcoin law “can be a message” that reaches Colombia, he said. Colombian banks have a strong commercial presence in the Central American country, with Davivienda, Banco de Colombia and Banco de Bogotá cornering 65% of the market according to Mauricio Tovar.

regulación-criptomonedas-blockchain-summit-latam-2021-colombia- Tovar (above), Chomczyk, Toro and Llanos discussed the current state of cryptocurrency regulation. Source: Youtube

Toro’s project to regulate cryptocurrencies


In addition to preaching his defense of cryptocurrencies and the right of Colombians to access them, Mauricio Toro also presented a project to regulate them. This initiative seeks to enable cryptocurrency exchanges, with their due records and requirements and with the corresponding regulated commissions for users.

In short, it is about allowing free and safe operations while protecting users. This would allow “giving a face to an economic reality that exists.

However, the congressman maintained that his project is not moving forward because of a presidential order. On August 3, 2021, Toro announced the reinstatement of his initiative to be treated in the Colombian House of Representatives, whose debate was postponed a year earlier pending a definition of the Financial Superintendence of Colombia.

As reported by CriptoNoticias, today in Colombia there is a regulatory sandbox that establishes, among other measures, that exchanges must be associated with a bank in order to operate.

Prior to its approval, “banks had strongly opposed this sandbox,” says Toro. In fact, in the last time the banks have closed the accounts of the exchange houses and thus hindered their operations, said the legislator. Currently, “the sandbox is being applied as the banks want it to be, although it wasn’t intended to be,” he added.

The vision of Llanos and Chomczyk

Beyond the Colombian current affairs described by the congressman, the panel touched on other issues related to the regulation of cryptocurrencies. In this sense, Juan Llanos and Andrés Chomczy agreed that “regulation is costly but valuable”, given that currently scams and risks for users abound.

“The industry grew fast and regulators were asleep at the wheel and were slow to see their power,” said Llanos. In addition, about what happened in El Salvador, he said he was surprised “by the incredible speed” of the implementation of the bitcoin law, although he stressed that “Bukele was brave and innovative” and that “we will have to see the reactions and consequences”.

A resident of New York for more than a decade, the consultant also gave his opinion on the already approved infrastructure law that proposes, among other measures, to heavily tax the cryptocurrency industry in the United States: “Something important is happening and it could change the world of cryptocurrencies. I worry about the asymmetry of power, what is left for the rest of the world?”.

Finally, consulted on the situation in Europe, Chomczy said that the legislations related to the digital economy on the continent “become increasingly complex” although they enjoy “an intellectual height” remarkable. For the moment, both with what is happening in El Salvador and in the rest of the world, he said he remains “skeptical”. and that “we have to see what happens in practice”.