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Why Colombia’s Next President Must Play a Decisive Role in Embracing Crypto

Brazil, Chile and Panama have taken their first steps toward regulating crypto assets, and Colombia’s next government will be looking to follow suit

Colombia’s next president will be required to play a decisive role in embracing and regulating cryptocurrencies.
May 30, 2022 | 06:25 pm

Bogotá — Colombia went to the polls on Sunday to elect a new president, in which left-wing candidate Gustavo Petro took the biggest share of the vote, with 40.32%, followed by independent candidate Rodolfo Hernández, who garnered 28.15%, with the two set to contest the second-round runoff scheduled for June 19.

The country faces a number of challenges that the next president must tackle, among them the need to rekindle foreign direct investment in the country.

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The new government will also have to embrace new technologies, one of which is cryptocurrencies, and how the new government will broach that particular theme has generated much expectation among voters.

The next president will play a decisive role in the adoption of policies that seek to strengthen the appropriation and scalable use of cryptocurrencies and such technologies in both the public and private environment, Alejandro Beltran, country manager of Buda in Colombia, told Bloomberg Línea.

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“Voters will be able to be part of the construction of an agenda in which the cryptocurrency market is positioned, based on the importance and current impact it has on technological development and investment,” he said.

The next Colombian government will be looking to follow the regional trend in the adoption of legislation to govern the crypto sector.

Recently, Panama passed the so-called ‘crypto bill’, which will govern the use of cryptocurrencies as a payment method; in Chile a bill was presented to Congress that establishes the basis for the creation of a central bank digital currency, and in Brazil the country’s Bitcoin law is currently being discussed for the president to designate or create a regulatory agency to oversee the cryptocurrency market.

Mexico’s central bank has also announced plans to launch a digital currency, although the process is likely to take a couple of years.

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So far, Colombia has launched a process that seeks to help the country achieve a degree of regulation for crypto, together with banks and cryptocurrency platforms to enable cash transactions with crypto assets.

The country therefore faces the challenge of creating a crypto agenda, and which would need to take into consideration the following key points:

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1. The increase in the number of payment points enabled for crypto

According to the Colombia Fintech Association, in Colombia there are 687 payment points located in commercial establishments that are able to carry out transactions of products and services with cryptocurrencies, especially Bitcoin.

Transactions involving crypto totaled $147 million in 2020.

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In the face of this, the lack of regulation continues to play a determining role in the generation of opportunities for innovation, as well as foreign and local investment, by requiring compliance with a specific regulatory framework.

In addition, Colombia is one of the countries with the most potential in this area, and currently has 41 active Bitcoin ATMs, according to CoinATMRadar.

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2. Incentives for financial security

Regulating services related to the exchange of cryptocurrencies is one of the main institutional arguments for enhancing the security of assets and, especially, of consumers in this type of platform.

Legal ambivalence plays a role in the dynamics of competitiveness, and is a factor contributing to the lack of investment and development in science, technology and innovation.

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3. Spaces for discussion and dialogue

It is essential to continue opening spaces for discussion within the three branches of political power in the country. With the growing prominence of cryptocurrencies and exchange platforms, the need to generate such spaces, in order to achieve clear operating rules in line with the country’s crypto reality, is becoming increasingly important. In order to support these initiatives, the consolidation of regulatory and institutional support is essential to guide the use and implementation of crypto in the Colombian market.

4. Crypto assets to foment financial inclusion

According to data from the Inter-American Development Bank (IDB), there are more than 250 million unbanked people in Latin America.

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Fintech and cryptocurrencies are therefore a viable alternative to banking, providing access to products that consumers would otherwise not be able to enjoy.

The adoption of cryptocurrencies can help mitigate the impact that this lack of banking generates, because crypto technology is available to all. The winner of Colombia’s presidential election will therefore need to implement strategies as part of their public agenda for the adoption of an adequate and regulated mercantile system that includes crypto asset exchange platforms, taking into account the need for greater citizen participation in the financial sector.