The financial regulator in Colombia has submitted a proposal for crypto regulation. The proposal contains a set of rules that will guide VASPs (virtual asset service providers) and their operations with banking firms.
According to the country’s Financial Superintendence, this proposal will clarify VASPs operations. The draft provides the definition of some key concepts. Furthermore, it outlines some rules banks must verify before accepting VASPs as clients.
Colombia Moves To Regulate VASPs
In Latin America, the issue of regulation is gaining momentum everyday as more countries adopt crypto. This is due to the increased adoption of digital assets in the area.
Presently, the FSC (Financial Superintendence of Colombia) is moving to lay out guidelines for crypto custodians and exchanges. These operations will guide their dealings with banking institutions.
Meanwhile, the drafted bill contains the definition of terms like virtual assets and VASPs. Similarly, it stated that VASPs must connect with the country’s financial intelligence office (UIAF).
Additionally, these VASPs must lay out ways to handle terrorism financing and money laundering on their platforms. Also, the project said VASPs must comply with the FATF’s (Financial Action Task Force) travel rule.
This travel rule admonishes banks to verify certain info from these VASPs. First, these VASPs must have the operational and technological capability to track digital asset transactions. Furthermore, they must also be able to extract the information of the sender and the recipient.
The Issue Of Cybersecurity And Transparency
One other aspect of the proposal is the issue of transparency. Crypto service providers must provide detailed information about their services to customers.
This also includes the risks and costs that are associated with digital assets. This is to ensure that investors are aware of the dangers associated with these assets.
Another area of the proposal is the issue of cybersecurity. These crypto firms must have a strategy to solve cybersecurity-related issues and hacks on their platforms.
Also, banks are to separate themselves from the dealings of these VASPs. They are to inform users that they are not responsible for any problems that come from dealing with the VASPs.
Furthermore, the proposal mentioned some restrictions on investments. It says that:
“Only financial entities that he authorization can capture assets through deposit funds. Meanwhile, they must make sure that the withdrawal and deposit of these resources on behalf of a VASP are done using non-face-to-face channels.”
Meanwhile, the draft is still at the discussion phase. Hence, the Financial Superintendence is open to suggestions from now till the 12th of August.