The Legal Status of Cryptocurrencies in Colombia: October 2023
Discover the legal landscape of cryptocurrencies in Colombia. In our first post, we explore the current regulations, challenges and future of digital currencies.
COLOMBIACRYPTOCURRENCIESLEGAL FRAMEWORK
Franco Valencia
10/25/20233 min read
Introduction.
Suppose you have made transactions with cryptocurrencies or are interested in doing so, personally or commercially, in Colombia. In that case, you have surely wondered if cryptocurrencies are legal or regulated by any entity in this Country. This article, prepared by Infinite Law Tech, will give you a clear and concrete overview of the regulation of cryptocurrencies and the current regulatory framework.
The current legal framework.
The first thing you should keep in mind is that in Colombia, cryptocurrencies do not have specific legal regulations and are not prohibited. Therefore, you can use them freely. Unlike other countries such as Ecuador, where its use and establishment of exchanges is not allowed by law. (1)
Government regulations.
Despite the lack of official legislation, the Government, through some control and surveillance entities, such as the Superfinancieras, as well as the Central Republic Bank and the entity in charge of collecting taxes, DIAN, have issued statements, resolutions, and decrees to regulate their use, prevent illicit acts and clarify concepts related to digital assets.
For example, the Central Bank has noted that "cryptocurrencies are not legal in Colombia and are not a currency backed by central banks in other countries. Therefore, they do not constitute a means of payment or useful for monetary exchange operations." (2)
Notwithstanding the above, the fact that they are not legal does not mean that their use is penalized or that they are, on the contrary, "illegal." In this case, the legality refers to the fact that they are not legal tender since the only official currency of Colombia is the Colombian Peso (COP). Regarding their legal situation, it could be said that crypto assets are currently in the space of Allegality because Congress has no official pronouncement.
Financial compliance.
Regarding financial compliance, as of April 1, 2022, cryptocurrency platforms registered in Colombia must report suspicious transactions exceeding USD 150 per transaction or USD 450 per month to the UIAF (Financial Information and Analysis Unit). Although this measure, established by Resolution 314 of 2012 (3), has generated criticism due to its low thresholds and workload, it aims to prevent money laundering and terrorist financing in cryptocurrencies.
Taxation.
In addition, the DIAN (Directorate of National Taxes and Customs) in recent years has begun to oversee cryptocurrency operations and demand the payment of taxes for related activities, including mining. The DIAN's vision is simple: It doesn't matter that, to date, no law regulates the matter; despite this, it is possible to collect taxes.
According to the entity, crypto assets should be considered intangible assets for accounting and tax purposes. Therefore, they should be registered in the taxpayer's assets according to the applicable rules, thus laying the foundations of taxation in cryptocurrencies in Colombia, which we will see in-depth in a future article.
In its latest pronouncement, the Unified Concept on cryptoassets, on October 17, 2023 (4), the DIAN compiled all the tax doctrine related to digital assets issued from 2014 to date.
Conclusions
In conclusion, cryptocurrencies in Colombia are not legally regulated, but they are allowed and can be used freely in the territory. Government entities have established rules that must be respected and considered, such as fulfilling financial obligations and declaring and taxing taxes.