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Colombia requires bitcoin exchanges to report user transactions since April

Key facts:

There is not much time left before the law that will require exchanges and individuals in Colombia to report on transactions with bitcoin and other cryptocurrencies that are carried out on behalf of clients becomes effective.

As of April 1, transactions with bitcoin (BTC) greater than USD 150 (or 590 thousand pesos) must be notified to the Financial Information and Analysis Unit (UIAF), attached to the Ministry of Finance.

Transactions with multiple cryptocurrencies above USD 450, meanwhile, must also be reported to the agency, which published the measure in resolution 314 of 2021.

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The regulation issued by the Uiaf seeks to prevent illicit acts, such as money laundering or financing of terrorism. However, the use of cryptocurrencies in Colombia is completely legal and the measure is perceived as a way to increase state controls over digital assets.

According to the document, «Virtual assets have created a situation that merits the intervention of the Uiaf» . Among the reasons cited by the agency are "the anonymity or pseudonymity in the transactions, the absence of support from the central bank and the non-recognition as an instrument that has liberating power."

The liberating power refers to the power that a currency has to extinguish obligations or debts, which is a special and unlimited attribute of common currency. Because cryptocurrencies do not have a legal status for payments in the country, the Uiaf fears that this loophole will become a way to circumvent controls on financial movements.

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Those who fail to comply with the regulations may be sanctioned with fines , in accordance with the regulations established by the Superintendency of Companies. These fines can be equivalent, in the case of money laundering, to between 100 and 400 minimum wages and non-compliance can lead to new fines. The Superintendence has a period of 15 days to provide the evidence in case of non-compliance, and 3 years to apply the sanction.

The warning could be uncomfortable for crypto users seeking a money exchange system that allows them privacy, away from state and corporate controls. Furthermore, the move would increase the costs for exchanges in terms of legal compliance, increasing the barrier to entry for new businesses.

Companies that operate with cryptocurrencies and digital assets must file Suspicious Transaction Reports (STRs) with the Uiaf. This type of report must be made immediately regardless of the amount . According to regulations, reports are sent through the Online Reporting System, for which a record must be created.

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Bitcoin regulations in Colombia march at a fast pace

Other state agencies in Colombia already have their sights set on cryptocurrencies. According to the general director of the National Tax and Customs Directorate of Colombia (DIAN), they expect to collect 3 billion pesos in taxes on operations with cryptocurrencies, about USD 7.7 million.

"It's time to pay taxes," said the official, who acknowledges the increase in financial activities with cryptocurrencies in the country.

In fact, Colombia turned out to be the third fastest growing country for bitcoin (BTC) owners in the world. This data comes from a query made by Finder in December 2021, where it was revealed that Colombia went from 7.7% to 14.5% of Internet users who have some cryptocurrency.

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These regulations seem to be the result of almost two years of discussions between the government and companies in the regulatory sandbox of local and international exchanges, which has been held in the country.