Colombia’s Financial Regulator Releases Crypto Regulations Draft for Public Comments
The proposal indirectly mentions the Financial Action Task Force’s (FATF) Travel Rule.
The Financial Superintendence of Colombia published the country’s crypto draft regulation for public comments.
The proposal will remain open for public comments until August 12.
If implemented, VASPs will have to stay connected with Colombia’s financial intelligence authority, the UIAF.
Amidst the increased regulatory scrutiny globally, the financial regulator of Colombia has released a draft of rules for the cryptocurrency industry. With this move, Colombia joins the likes of the United States and the European Union in regulating digital assets amid a crypto market downturn.
The Financial Superintendence of Colombia, the country’s financial regulator, has presented the proposed regulations to the public and is seeking their comments. Currently, in the discussion stages, the proposal is open to receive suggestions until August 12.
The Proposed Regulation
With its proposed regulations, the Colombian government seeks to clarify the definition of virtual assets and virtual asset service providers (VASPs) and determine a set of prerequisites that banks need to verify before accepting cryptocurrency exchanges and custody providers as customers.
The rules also cover general cybersecurity guidelines and set the ground for tracing crypto transactions and risk management systems to prevent the use of digital assets for money laundering and terrorism financing. And for this, the authorities will make it mandatory for Virtual Asset Service Providers (VASPs) to be connected to the financial intelligence office of Colombia, the UIAF.
The Travel Rule
The proposal also indirectly mentions the Financial Action Task Force’s (FATF) Travel Rule and states that VASPs must obtain, preserve, and transmit the information of both the originator and the beneficiary of crypto transactions.
Additionally, the proposal establishes that the VASPs must present clear information to their customers about the services they offer, the costs and risks associated with these services, and the virtual assets on their platforms.
These rules come following the launch of a regulatory sandbox (LaArenera) last year that helps crypto companies that want to operate in the country with the regulatory aspects and implementation of the technology.
The Popularity of Crypto Assets in Colombia
This latest move from the South American government isn’t surprising given the high interest in the asset class in the country. After all, 6.1% of Colombians own crypto, while 80% have reportedly shown a willingness to invest in digital assets. The country is also ranked fourth in the world in terms of Peer-to-Peer Bitcoin trading volume.
Thus, regulating this burgeoning sector will ensure that Colombian investors are protected and that no illicit activities are facilitated using crypto.
Speaking of the Travel Rule, any VASPs that plan to offer services in Colombia must prepare for compliance beforehand. All that a VASP requires to comply with the Travel Rule is a Travel Rule Solution (TRS), and we have an excellent suggestion: Veriscope. Interestingly, Veriscope is also the only solution against the “Sunrise Issue,” a significant problem that VASPs face during the Travel Rule compliance.
Read more about Veriscope here: https://www.veriscope.network/
If you are a VASP and want more information on Veriscope, please contact the BizDev team here: https://www.veriscope.network/contact.