Colombia's sandbox "brought more challenges than achievements" according to cryptocurrency companies

Key facts

:

  • In Colombia are fully enabled operations with cryptocurrencies, they clarified.

  • “For now, banks view it with fear and uncertainty,” said Binance’s Country Manager.

Representatives of the cryptocurrency sector in Colombia gave their opinion on the current regulatory sandbox taking place in the country. “So far, it brought more challenges than achievements,” said Bryan Benson of Binance. However, the president of Colombia Fintech believes that “the journey has served innovation very well”.

To discuss this topic, Bryan Benson (representing Binance), Luis Iregui (CoinK) and Erick Rincón (president of Colombia Fintech) participated in a panel at the Blockchain Summit Latam 2021. The conference

was moderated by Juliana Carmona, COO of Colombia Fintech.

What is the sandbox and what is its objective

First, Rincón explained that the supervisory sandbox, which “is not the same as a regulatory one” seeks to “understand the rules for the deposit and withdrawal of money by those who interact with the exchanges against financial institutions”

.

Currently, Rincón said, in Colombia there are problems for the opening of bank accounts related to activities with cryptocurrencies because of some circular letters that the Superintendence of Financial Services has issued. “In these, financial institutions are prohibited from offering services with cryptoassets,” he stresses.

However, he also clarified that the trade and development of cryptoassets is fully enabled in the country, since these circulars do not prohibit it. This is a confusion that many people fall into. “Banks understood the circulars to mean that clients cannot handle resources derived from cryptocurrency activities. What we are looking for is to eliminate that tension,” he detailed.

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With this experimentation sandbox, commented the head of Colombia Fintech, “the idea is that by the end of 2022 we get to define instructions that give operational peace of mind to financial institutions and the market.” For the moment, he said, “this journey has been very useful for innovation. It was a space to learn and for the regulator to know”.

Colombia's sandbox "brought more challenges than achievements" according to cryptocurrency companies Colombia's sandbox "brought more challenges than achievements" according to cryptocurrency companies Benson, Iregui and Rincón participated in the Blockchain Summit Latam 2021. Source: YouTube.

As reported by CriptoNoticias, the sandbox is already operational

for some of the nine alliances formed between exchanges and banks or between exchanges and financial services entities such as Coink.

In this regard, the country manager of Binance in Colombia, Bryan Benson, said

that this has been “hard work” for the company, which has been “dedicated in recent months to complying with regulations around the world”.

“So far, there have been more challenges than achievements. We’ve had months of integration and every alliance has its complexities,” said Benson, who said that “the trick is to convince the banks that it’s right for them. For now, they view it with fear and uncertainty. For example, he said, “the fact that Binance doesn’t have a parent company was an interesting thing for the banks to understand, and deep down I don’t know if they totally like it.

Looking ahead, “it’s not clear how it’s going to continue. All the actors are trying to understand along the way. The evidence is that not all the partnerships have come out to operate yet,” he said.

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For his part, Luis Iregui said that Coink’s position so far is similar. “We are getting into uncharted territory for all players,” he said. He also added that one of the main challenges was figuring out how to flesh out the testing process. “We have to do it right because stumbling in this first step could cost us years for the crypto system in Colombia,” he opined.

In this sense, “we not only have to keep the SFC happy, but also the users. We have to give them a world-class experience, not an improvised one. To this end, the infrastructure had to be adapted; to this end, the company decided to share KYC (Know Your Customer) with Banexcoin, its partner exchange.

In conclusion, the three speakers agreed that no one has “the magic ball” to know what will happen at the end of 2022, when the tests conclude. The change of government in Colombia after the elections may mean “an important shift in the guidelines,” said Rincón, who confirmed that it is important to “make the regulatory leap in quality to avoid falling into a lag that could be unfortunate for the country.