Financial Crime World

Cryptocurrency Boom Sparks Regulatory Scrutiny in Chile and Latin America

The rapid growth of cryptocurrencies across Latin America has brought regulatory concerns to the forefront, prompting governments to establish frameworks for their use. While some countries have fully adopted crypto, others are taking a more cautious approach.

Chile’s Bitcoin Bill

Last year, a Bitcoin bill was presented to Congress in Chile aiming to create a safe environment and provide protection for owners of crypto assets, financial intermediaries, and those who interact with the digital currency market. The proposal would see Chile’s Central Bank responsible for regulating cryptocurrencies.

Argentina’s Regulatory Challenges

Despite initiatives to establish regulation, no significant progress has been made in Argentina. However, new controls are expected following requests from the International Monetary Fund (IMF) to prevent money laundering and strengthen tax collection.

In contrast, El Salvador is the only country that has authorized the use of Bitcoin as legal tender. Bolivia, on the other hand, has prohibited its use and commercialization, making it illegal for citizens to use cryptocurrencies to purchase goods and services.

Adoption Rates in Latin America

According to Javier Madariaga, executive director of NGO Bitcoin Argentina, four Latin American countries - including Argentina - are among the top 20 globally with the highest adoption rates of cryptocurrencies. He notes that individuals have found decentralized technologies a better model, and the public sector is becoming increasingly aware of this trend.

Cryptocurrencies as a Means of Payment

The use of cryptocurrencies as a means of payment is also gaining traction, particularly in countries where their own currency is weak or where inflation is high. In Argentina, for example, six out of ten surveyed cryptocurrencies had a positive real return against inflation during March, with Argentines finding greater value refuge in crypto assets than in the Argentine peso.

Regulatory Efforts Across Latin America

  • Argentina: Regulation is expected to be implemented, with bills proposed by both ruling and opposition parties. The IMF has urged the government to prevent money laundering and strengthen tax collection.
  • Brazil: Four bills have been presented for the regulation of cryptocurrencies, aiming to comply with the country’s anti-money laundering law and apply the consumer protection code to the crypto sector.
  • Uruguay: A cryptocurrency commission was established in 2018, and a document detailing a possible regulatory framework was released last year. The central bank plans to submit a project to regulate part of the virtual assets market this year.
  • Colombia: A regulatory sandbox has been given the green light to experiment with and study regulations for cryptocurrencies.
  • Peru: Congress is debating a draft framework law for the trading of crypto assets, proposing the creation of a public registry of crypto service providers and the obligation to report “suspicious operations” to the country’s financial intelligence unit.

Conclusion

The surge in popularity of cryptocurrencies across Latin America has brought regulatory concerns to the forefront. While some countries have fully adopted crypto, others are taking a more cautious approach. As governments work to establish frameworks for their use, it remains to be seen how these regulations will impact the growth and adoption of cryptocurrencies in the region.