As we well know, the crypto assets are an increasingly growing phenomenon, the number of players who access the market day by day increases, as well as the profits of financial intermediaries, the so-called exchanges.

The “crypto” phenomenon is hardly regulated in the Latin American region, in some countries there are hardly any tax provisions or regulations.

Several countries in the region are working on regulating the phenomenon in different bills, in the European continent they are working on a strong regulation through the so-called Digital Finance Package (DFP).

In this post, we will carry out an analysis of the current regulatory situation in some countries in the region, as well as the European Union’s DFP project.

We will begin by analyzing the Argentine case. In Argentina there is no provision or norm of a federal nature that regulates the “crypto” phenomenon, although there are some small resolutions by the Federal Administration of Public Revenues, through general resolution 4614, which requires to exchanges or financial intermediaries to comply with an information regime before the treasury, in which they must inform the list of their clients, and their account balances, among others.

In Colombia, they are working hard on a bill to regulate crypto-assets since 2018, it goes hand in hand with some concepts of the orange economy model, through the norm that aims to regulate crypto-assets, an attempt is made to establish a registry called the Single Registry of Crypto-assets Exchange Platforms (RUPIC acronym in Spanish), it establishes the following conditions for the exchanges that are in said registry:

• Be domiciled in national territory.
• To include the Exchange of Crypto Assets within the corporate purpose.
• Maintain a computer security program that ensures that the systems will be available and functional, that they will protect sensitive information from unauthorized use. An operation manual with this information must be submitted to the Ministry of Information Technology and Communications, as explained below.

Mexico is the only country in the region that has a law that regulates the crypto phenomenon through the so-called “fintech law”. It regulates 4 key points, which are: virtual assets (such as digital currencies), financial advice, crowdfunding, and electronic payments.

Likewise, the Mexican standard gives a definition of what is understood by virtual asset, defined as “the representation of value registered electronically and used among the public as a means of payment for all types of legal acts and whose transfer can only be carried out through electronic means “.

In the European Union, the so-called Digital Finance Package or DFP is being worked on. Its objective is to make financial services more digital and stimulate responsible innovation and competition between financial service providers in the EU.

The Digital Finance Strategy is accompanied by a proposed legal framework on crypto assets (that is, digital representations of securities or rights that can be stored and traded electronically). This framework is divided into a proposal for a Regulation on crypto asset markets (“MiCA”) and a proposal for a Regulation on a pilot scheme for market infrastructures based on distributed ledger technology (“DLT pilot scheme”). The goal is to drive innovation while preserving financial stability and protecting investors from risks.

CONCLUSION

After having carried out an analysis of the current situation in some Latin American countries and the existing situation in Europe, we can see that the phenomenon of “crypto”, little by little begins to be regulated.

One of the points that we must ask ourselves is if the regulations will go from the perspective of the consumer or investor, or on the contrary if they try to regulate the conduct of intermediaries or exchanges. The current existing regulations would uniformly demonstrate that an attempt is made to regulate the conduct of exchanges as compared to the conduct of investors.

On the other hand, another of the existing questions is, if the creation of a regulation on “crypto” in accordance with the guidelines of the FATF Travel Rule 16, would generate a higher level of trust and transparency; and therefore, better results in the investment market or, on the contrary, if a regulation within the crypto market would generate a strong decline on the part of investors or consumers.

One position considers that the crypto market is self-regulating, following Adam Smith’s theories of self-regulation of supply and demand, and the invisible hand of the market, but as we know this has never happened, investment markets need be regulated to avoid the generation of externalities or market errors, such as information asymmetries.

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