As cryptocurrency becomes more mainstream, Colombia is preparing to strengthen its regulatory grip. Although full regulations have not yet been formalized, the Superintendencia Financiera de Colombia (SFC) is actively working towards comprehensive rules for the crypto industry, expected to be solidified in 2024-2025. The SFC has already introduced initial guidelines through a regulatory sandbox that ended in 2023, and the next steps could include mandatory registration, stricter AML rules, and market conduct regulations. The question is: Is your business ready for these changes?
Here's what you need to know and how to stay ahead in this rapidly evolving regulatory environment.
Key dates and transition timeline
Although the SFC has not fully formalized its regulatory framework, 2024 is expected to be a year of significant progress. While the sandbox has ended, the SFC is reviewing its approach, and crypto regulations could be introduced by 2025. Businesses will need to adapt once these regulations are in place.
Colombia is positioning itself to become a key player in the global crypto economy by strengthening its regulatory framework. While full regulations have yet to be finalized, the Superintendencia Financiera de Colombia (SFC) is actively working towards comprehensive rules for the crypto industry, anticipated to be solidified by 2024-2025. With the end of its regulatory sandbox in 2023, the next phase may include mandatory registration, stricter anti-money laundering (AML) measures, market conduct regulations, and environmental disclosures. This raises the question: Is your business prepared for the upcoming regulatory landscape?
Establishing a foundation: The SFC’s Regulatory Sandbox (2020-2023)
In 2020, the SFC introduced a regulatory sandbox designed to explore the crypto market under a controlled environment. This initiative allowed crypto businesses to operate within a legal framework while the SFC evaluated the implications of digital assets. Although the sandbox ended in 2023, it laid the foundation for a more structured regulatory framework, helping the SFC develop guidelines that promote innovation while ensuring security and compliance.
The sandbox showcased Colombia’s commitment to fostering a safe and transparent crypto market, setting the stage for more comprehensive regulations expected by 2025. As with other global financial hubs, Colombia seeks to balance innovation with rigorous oversight to attract investment and build a secure ecosystem for digital assets.
Strengthening AML and KYC measures: 2024-2025
Building upon the lessons learned from the sandbox, the SFC is expected to introduce stricter AML and Know-Your-Customer (KYC) regulations by 2025. These new rules are likely to expand Colombia’s AML/CFT framework, with enhanced KYC processes, more rigorous transaction monitoring, and stricter reporting requirements. Businesses will need to adopt advanced technologies to comply with these new standards.
By tightening these regulations, the SFC aims to protect Colombia’s financial system from illicit activities, positioning the country as a safe and compliant market for cryptocurrency. This focus on AML/KYC is in line with global standards, making it essential for businesses to upgrade their systems in anticipation of the new rules.
Protecting investors: Enhanced transparency and market conduct regulations
To safeguard investors and promote market integrity, the SFC is likely to adopt stricter disclosure requirements and market conduct rules. These new standards will require crypto companies to be transparent about the risks associated with their products and services, mirroring global best practices.
The introduction of these rules will align Colombia’s crypto market with traditional financial markets, protecting investors from fraud and manipulation. By enhancing market conduct regulations, the SFC aims to ensure that the crypto industry operates under the same level of scrutiny and fairness as other financial sectors.
Mandatory registration and internal controls
One of the most significant changes expected in Colombia’s crypto regulations is the shift from voluntary to mandatory registration. Under this new framework, all crypto businesses will need to register with the SFC, enabling greater oversight and ensuring compliance with the country’s evolving rules. Additionally, companies will face stricter internal control standards, including regular audits and stronger governance practices.
This move reflects a global trend towards formalizing the operations of crypto businesses, as seen in countries like Germany under the Markets in Crypto-Assets (MiCA) framework. Early adoption of these practices will position businesses for long-term success in the Colombian market.
Environmental impact and stablecoin regulations
As environmental concerns grow, Colombia may require crypto companies to disclose their energy consumption and carbon footprint, particularly for proof-of-work cryptocurrencies like Bitcoin. This would follow global trends, where jurisdictions like the EU are increasingly focused on the environmental sustainability of digital assets.
Additionally, stablecoins could face new regulations, including reserve requirements and redemption rights, particularly for those pegged to non-local currencies like Tether (USD). Companies offering stablecoins should be prepared for potential restrictions and consider alternatives, such as peso-backed stablecoins, to remain compliant.
Looking ahead: Key areas to watch in 2025
As Colombia’s regulatory landscape evolves, several key areas are expected to be of particular interest in 2025:
- Introduction of new tax policies: Colombia may introduce specific tax regulations for crypto transactions, similar to those in other countries, providing clarity on the tax treatment of digital assets.
- Expansion of compliance requirements: Companies should anticipate expanded reporting and monitoring obligations, particularly regarding market conduct and AML/CFT measures.
- Increased focus on blockchain technology: As blockchain technology continues to evolve, the SFC may explore new ways to integrate it into the country’s financial system, including tokenization and digital asset management.
Conclusion: Adapting to Colombia’s evolving regulatory landscape
Colombia’s evolving cryptocurrency regulations present both challenges and opportunities. While compliance costs may rise, businesses that proactively adapt to these changes will benefit from a more transparent and secure market. By reviewing internal systems, strengthening KYC and AML protocols, and preparing for environmental reporting, companies can thrive in Colombia’s new regulatory landscape.
Take action now: Review your compliance systems, strengthen KYC and AML measures, and prepare for environmental reporting requirements. Businesses that act early will not only survive but thrive in this evolving market.
Need expert advice? Reach out to Scorechain for guidance on navigating Colombia’s regulatory changes and ensuring your business stays compliant.
