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Financial Superintendence of Colombia Presents Project to Regulate Crypto Service Providers

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The Colombian Financial Authority has unveiled a blueprint to clarify how links between banks and virtual asset service providers (VASPs) will be maintained in the future. The document defines some key concepts and defines a set of prerequisites that banks must check before accepting virtual asset service providers as clients.

Virtual asset service providers to be regulated in Colombia

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Regulation is becoming a key target for Latin American countries, where cryptocurrency adoption is growing at a significant pace. Now Financial Authority of Colombia presented a document that aims to establish regulations regarding the requirements that crypto exchanges and custody service providers must meet in order for banks to serve them as customers. The draft defines key concepts such as virtual asset service providers (VASPs) and virtual assets within regulation.

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Similarly, it establishes that virtual asset service providers must be connected to the UIAF, Colombia’s financial intelligence service, and have an action plan to combat money laundering and terrorist financing attempts that could potentially be undertaken using their platform.

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The draft also indirectly mentions compliance with the travel rules promoted by the Financial Action Task Force (FATF). It states that banks must ensure that these VASPs have:

Technological and operational capabilities to monitor transactions with virtual assets, as well as to receive, store and transmit information about the sender and beneficiary of each transaction.

Additional requirements

The proposal establishes that VASPs should be able to provide their customers with clear information about the services they offer and the risks associated with those services, the costs associated with those services, and the virtual assets present on their platforms.

VASP will also have an operational and cyber security risk management plan to address potential hacks or platform issues that could impact how their services are delivered to customers. In addition, banks will be required to separate their responsibilities from those of VASPs, informing customers that only they and these platforms are responsible for VASP-related issues.

The proposal also sets limits on investments. It is stated here:

Supervised entities authorized to raise resources through deposit products or funds must ensure that deposits and withdrawals of resources in deposit or fund financial products on behalf of a VASP are made only through non-personal channels.

The proposal is still under discussion and the Financial Inspectorate will receive proposals on it by 12 August.

What do you think of the VASP regulation proposal in Colombia? Tell us in the comments section below.

Denial of responsibilityA: This article is for informational purposes only. This is not a direct offer or solicitation to buy or sell, nor is it a recommendation or endorsement of any products, services or companies. does not provide investment, tax, legal or accounting advice. Neither the company nor the author is directly or indirectly liable for any damage or loss caused or alleged to be caused by the use of or reliance on any content, goods or services mentioned in this article.

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