• Lawmakers in Colombia propose a bill to regulate crypto and protect users from fraud and financial crimes.
• The bill introduces a licensing system for crypto firms to follow anti-money laundering and financial regulations.
• Experts warn strict rules could hurt innovation while lawmakers say clear regulations will attract investment.

Colombian lawmakers have introduced a bill with VASP licensing aimed at regulating the nation’s growing cryptocurrency sector. Senator Gustavo Moreno and Congress Representative Julián López drafted the proposal to establish a legal framework for digital asset service providers. The lawmakers argue that the absence of clear regulations exposes users to financial risks and enables illicit activities.

The proposed legislation seeks to introduce Virtual Asset Service Provider (VASP) licensing to ensure that crypto firms operate under strict financial regulations. Over 5 million Colombians use cryptocurrency. In 2024, the cryptocurrency transactions reached $6.7 billion. The lack of oversight has led to an increase in scams and fraudulent schemes despite the growth. 

New Compliance Measures for Crypto Firms

The bill features 16 essential sections which are focused on consumer protection, financial monitoring and market transparency. All crypto exchanges and wallet providers must register as VASPs to fulfill anti-money laundering (AML) and counter-terrorist financing (CFT) regulations. The regulatory measures seek to reduce digital asset-related financial crimes.

The bill also includes rules for marketing, taxation, and public education on cryptocurrencies. Legislators believe that industry regulations will protect users while attracting investments. The integration of crypto into Colombia’s national financial system aims to build a secure environment which attracts both investors and businesses.

Balancing Regulation and Innovation

Some industry experts warn that excessive restrictions could harm innovation. They argue that strict policies might push crypto entrepreneurs to relocate to more lenient markets. Advocates emphasize that there is a need for a regulatory framework that will ensure security while allowing the sector to grow.

The proposal also introduces guidelines for crypto taxation. Supporters believe that reasonable tax policies will encourage adoption, while critics caution against heavy tax burdens that might deter investment. As other nations implement clear regulations, Colombian lawmakers see this bill as an opportunity to position the country as a responsible player in the global crypto market.

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