Analysis of the Cryptocurrency Market in Colombia: Development and Regulation

The cryptocurrency landscape in Colombia in 2024 is one of dynamism and complexity: an ecosystem of active government initiatives against a hostile, yet opportunistic, regulatory setting. Coupled with a general broadening trend in the adoption of digital currency in Latin America, the use of crypto for transactions and as a store of value has increased in the country. It takes a bird’s-eye view of the regional crypto market: Colombia is going through a phase of transformation, balancing the need for innovation and regulation.

Government initiatives that led to innovation.

Central bank digital currency: The Colombian government came up with a draft in November 2023 that included the CBDC and its regulating arrangements. This initiative only highlights their quest to modernize the financial infrastructure, bring transparency and adopt it responsibly.

Blockchain for Biodiversity: Inter-American Development Bank Challenge, January 2023: Colombian innovation takes the front seat. A local firm called Terrasos explained how digital tokens can help preserve biodiversity, clearly illustrating how blockchain technology can leave a lasting positive impact on the world.
Money seems to tell a different story from these blockchain startups. A $750,000 investment in Bogotá has served to develop 100 blockchain-focused companies by 2021. It is synonymous with investment and consulting for onboard blockchain technology.

Regulatory pathway

Ban on banking: The most serious obstacle for Colombian crypto companies is the ban on banking activities that they can offer. It mandates the smooth operation of such companies in terms of access to traditional financial channels.

Limited Identity: Although it is possible to have companies with cryptocurrencies, Colombian authorities do not consider them to be legal tender or a valid investment. Furthermore, firms may not offer crypto-related advisory or management services.

Tax uncertainty: Whether or not crypto mining income is taxable may remain a question, but the lack of sector-specific rules creates uncertainty for investors and businesses.

Regulatory bodies and associations

Government agencies: Banco de la República, Superintendencia Financiera de Colombia (SFC), Superintendency of Corporations, and the Directorate of National Taxes and Customs — DIAN — have been the main regulatory authorities awaiting cryptocurrency solutions.

Industry watchdogs: The Colombian Blockchain Association, CBA, and the Latin American Blockchain Association secure compliance within the cryptocurrency market.

Colombia’s CBDC Pilot: A key use case is the Central Bank of Colombia’s partnership with Ripple for a central bank digital currency pilot in June 2023, setting a clear path for the mainstream adoption of digital currencies in this developing country. looks at the possible uses of Its complete

Betterment’s Crypto Move: While not in Colombia, the US investment adviser made the case for the growing trend of a run by established financial institutions in the crypto space with the acquisition of Makara in February 2022.

Key Colombian Crypto Players

These players include Quipu, Kravata, Factrading, Wupo, PANDA Group, ThousandToken, MarketXM, Bacano Go, NetM, and Psyche Coin. Each of these players is contributing greatly to changing the face of Colombia’s cryptocurrency market.

The approach to cryptocurrency in Colombia is being held in progress. While government initiatives are promising, the current regulatory landscape has created problems. With Colombia’s intelligence and growing number of local players, the prospects for crypto in this South American nation could be very exciting.

Market size

The cryptocurrency market in Colombia is expected to grow from US$13 million in 2023 to US$17 million in 2028, at a CAGR of 6.09%. If the regulatory framework allows for this growth while mitigating the risks associated with the market, this development could lead to a reconsideration of Colombia’s position as one of the most promising countries in the global cryptocurrency landscape.

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