Uruguayan and Colombian senators have introduced legislation with the goal of establishing a more secure Bitcoin market in their respective countries.
Uruguay has joined the recent wave of governmental measures in Latin America to regulate the Bitcoin and cryptocurrency industries, just as Colombia is updating its existing crypto framework.
Yesterday, Uruguayan businessman and Senator Juan Sartori introduced a formal draft of a bill to regulate cryptocurrency in the country’s parliament. The proposed law aims to close legal loopholes in the cryptocurrency industry with the goal of reducing the number of crimes associated with the use of virtual assets.
Las criptomonedas son una oportunidad para crear inversión y trabajo. Hoy presentamos un proyecto de ley, pionero en el mundo, que busca establecer un uso legítimo, legal y seguro en los negocios vinculados con la producción y comercialización de monedas virtuales en Uruguay.
— Juan Sartori (@JuanSartoriUY) August 3, 2021What is in the Uruguay Bitcoin bill?
Given that it does not alter any previously defined concepts or create the need to modify the country’s current legal and administrative framework, the bill’s broad scope may increase its chances of being passed and becoming law.
Because crypto mining, such as Bitcoin mining, is classified as another type of economic activity, the proposed law primarily seeks to regulate the issuance of crypto assets, their custody, and their trading, rather than the mining of crypto assets themselves.
A crypto asset is defined as “digital products that use cryptographic encryption to guarantee their ownership and ensure the integrity of transactions.” In writing it down, the bill hopes to provide clarity to regulatory agencies when they are developing rules, thereby avoiding conflicting interpretations in the future.
In addition, the bill proposes three mandatory licenses for those who wish to participate in the cryptocurrency industry, which would be issued by the state.
Those who act as intermediaries in the markets are granted a license under the first of these categories. In this case, both centralized and peer-to-peer exchanges that operate in the country must be registered as such with the appropriate regulatory authority.
The second type of license is a crypto asset custody license, which means that any company that safeguards the assets of its clients must be registered with this agency. There are several types of financial institutions that provide services to cryptocurrency users, such as savings accounts, custody, and loans, in this category.
It is the third that grants the right to issue crypto-assets or tokens that have financial characteristics. To put it another way, initial coin offerings (ICOs) and companies interested in issuing stablecoins or proprietary tokens (such as JP Morgan’s JPM Coin in the United States, for example) must obtain the necessary licenses before launching their tokens.
According to the bill, crypto mining will not be subject to the same restrictions as other types of special licenses, but it will be subject to a permit issued by the Ministry of Industry.
In accordance with the Industrial Registry of the Ministry of Industry and Commerce, mining will be classified as a “industrial activity”—which means that it will be subject to regulation by the Ministry and that the process for obtaining a permit will remain relatively simple and straightforward.
Senator Mauricio Toro of Colombia, on the other hand, announced yesterday that he has made significant progress on his own bill, which seeks to enact crypto-friendly regulations in the nation.
In the words of the Colombian senator, the law is fundamentally aimed at controlling the black market, ensuring safer transactions, and encouraging alternatives to the traditional banking system.
Radicamos de nuevo nuestro Proyecto de #PlataformasCripto!
Crearemos una reglamentación integral para transar criptoactivos y:
-Cerrar puerta a mercados negros
-Tener alternativa al sistema bancario
-Garantizar seguridad en transacciones
Léanlo aquí👉🏽https://t.co/1IBI98NH7h pic.twitter.com/zXBu8e1utk
— Mauricio Toro (@MauroToroO) August 3, 2021In order to achieve this, the bill establishes a series of requirements for national and international exchanges wishing to operate in Colombia, including the requirement that they register with Colombian authorities before doing so.
Should the bill become law, companies will also be required to clearly state their corporate purpose as providing crypto-asset exchange services to consumers, as well as to provide risk disclosures regarding the irreversibility of cryptocurrency transactions.
