The growing popularity of cryptocurrencies in Colombia has been widely discussed, equally there is no unanimous consensus over the key reasons that are driving this momentum.

The fact is that in that location are several studies, such as the one carried out by Statista, that reflect a significant and relevant involvement on the part of the Colombian user, highlighting it equally the third land with the largest number of crypto users.

The stats speak for themselves

Co-ordinate to the Statista Global Consumer Survey published in 2022, in which an online poll was conducted amongst 1,000 people for each state studied, showed that Latin America is the region with the highest number of crypto users in the world.

Another survey conducted in 2022 by the peer-to-peer crypto exchange Paxful, in clan with the consumer-insights firm Toluma Insights, claimed that Bitcoin (BTC) and Ethereum (ETH) adoption was in an uptrend within the Colombian population.

The report claims that 87% of respondents knew nigh the existence of cryptocurrencies, of which 80% showed willingness to invest in crypto. That is not surprising, considering that Paxful processed more than than $1 million from Colombian users in 2022.

Furthermore, in 2022, Forbes published a list of the "Top 10 of Bitcoin Cities" in the earth, placing Colombia'southward capital urban center Bogotá in seventh place due to its 87 crypto-related businesses at the time.

A response to aggrandizement?

At that place are mixed opinions about what makes Republic of colombia into one of the countries with the highest crypto adoption in the world.

In a dialogue with Cointelegraph, Jarek Duque, chief annotator for the Latin America region at UAE-based fiscal academy Tradepedia LLC, says that inflation cannot be one of the reasons for this crypto popularity boost, as the country has had one of the most stable inflation rates within the region, which currently stands at 3.72% annually.

That's not the instance for Argentina, claims Duque, which has unstable and college inflation, and this explains why it'due south the third country with the highest crypto adoption in the world, according to Statista.

To explain why there is a crypto boom in Colombia, Duque quotes a DEA report published in 2022 stating that cryptocurrencies are existence used for money laundering by Mexican and Colombian cartels. Duque commented on the following regarding the investing civilization toward cryptocurrencies in Colombia:

"Overall, financial pedagogy in our country is low, considering that in the United States effectually 70% of the developed population has some thought of the financial markets, while in Colombia only 1% accept some knowledge near information technology. The latter would imply that Colombians in general don't manage enough technical knowledge to sympathise an nugget as complex as cryptocurrencies and accomplish the bespeak of considering them as a condom haven."

There were attempts to regulate the crypto environment in Republic of colombia, although they were seemingly unsuccessful. For instance, on April 4, 2022, a draft with the specifications to regulate the Crypto Exchange Platforms was published. The objective of this law was to ascertain in general terms how companies offering crypto exchange services in Colombia should operate.

However, although at that place is no articulate position from the Colombian financial watchdogs, Banco de la República — Columbia's fundamental bank of Colombia — published an article in 2022 that recognized the existence of crypto avails. The central bank weighed in on whether to consider cryptocurrencies as existent money:

"Although these assets are presented with the capacity to fulfill functions of means of payment, deposit of value and unit of account, in practise, as stated past several publications of the Bank for International Settlements (BIS), they lack the attributes of the legal tender and are not probable to be considered as coin."

Alvaro Saavedra, a Colombia-based lawyer, believes that there are contradictions in how the national government views cryptocurrencies, which has made regulating such avails even more difficult. But Saavedra says at that place is a critical reason that explains the government'south unwillingness to establish a regulatory framework, beyond a clear lack of noesis about cryptocurrencies:

"Banco de la República'south position towards cryptocurrencies is very valid because the style in which Colombian lodge is bundled implies material limits to requite cryptocurrencies a certain validity from the legal bespeak of view. For instance, the existence of an armed disharmonize and a high number of drug trafficking groups implies that the State is afraid of regulating cryptocurrencies and if they practice, they believe that the door would be left open up for the creation of illegal economies and thus boosting coin laundering."

Cointelegraph reached out to Banco de la República and Ministry of Information Technologies and Communications for further description, simply has received no response every bit of press time.

Colombia'southward electric current legal framework for crypto business organization

Alejandro Beltrán, country manager of Buda — one of the largest cryptocurrency exchanges in Latin America — spoke with Cointelegraph about the regulatory legal framework in the country. In his opinion:

"It is highly restrictive and is doing huge damage to the Colombian people. Commencement, the Fiscal Superintendence has most banned banks from offering services to cryptocurrency companies, which has eliminated many of the good actors who wanted to operate transparently. This has produced that most of the volume traded goes to the black market or more informal instances that oftentimes expose people with less experience."

Beltrán also pointed out that the "rigidity" of regulatory problems in Colombia hasn't been established, while a proper environment for the development of the manufacture in the country has. But this fact has non prevented crypto sphere companies from continuing to exist interested in the Colombian marketplace. Beltrán believes that Colombia is a favorable state for crypto concern, adding:

"Republic of colombia has three characteristics that convinced u.s.a. that it was the best country where we should try to position ourselves. [...] Cyberbanking is relatively low and existing banking services are very archaic. For example, an interbank transfer between people takes an boilerplate of 48 hours to reach the destination business relationship and costs about USD $2 per transfer, compared to Chile, which is free and instant."

Buda's Colombia country managing director also believes that a high flow of Venezuelan immigrants in the country also helps to boost crypto transaction volumes in Colombia, translated into a menstruation of remittances.

Information technology is worth noting that Colombia has received more than 1.ii one thousand thousand Venezuelans, co-ordinate to Migración Colombia, the state agency responsible for regulating the catamenia of entry and exit of people in the land. On the regulatory framework in Colombia, Beltran believes that information technology's highly complex and restrictive, making the work difficult for exchanges or other crypto-related firms that would like to practice business within the territory.

Similarities with the European legal model

The Colombian tax entity DIAN considers Bitcoin and digital currencies every bit fabric goods, and the Financial Superintendence sees them as an intangible nugget subject to income tax, while the Superintendence of Commerce says that they are not a value.

Despite the different concepts that local watchdogs have, the general consensus toward cryptocurrencies in the Latin American country is not far unlike from the European model.

Javier Pastor, chief sales officer of the Espana-based Bit2me substitution, which has Colombian users on its platform, spoke to Cointelegraph about the similarity of Colombia's legal concept toward cryptocurrencies with Spain:

"In the eyes of the Spanish Hacienda [the revenue enhancement watchdog], cryptocurrencies are assets, non money, equally the Euro and the dollar are. It is existence considered as just 'exchange.'"

As for how they have been able to penetrate the Latin American market place and the problems they take faced, Pastor states that they had no problem with the legal attribute. However, he went on to clarify:

"If it is true that [Latin American] banks take limitations and restrictions to send money to crypto exchanges; the same situation that happens with Spain. [...] We see that there is a problem at a general level, not merely in Latin America or in Republic of colombia, regarding the transactions that can exist made towards companies like ours, because Bitcoin, for instance, represents an alternative monetary and financial arrangement that would remove from the environment to traditional systems."

On the other hand, Buda's Colombia country head proposed a legal framework that clears all the ambiguity that surrounds it. As Beltran states, in Colombia'south case, "everything is ready" and so that there can be an appropriate environment where cryptocurrency companies can operate without doubtfulness in the market.

Media outlets' role in the heave of crypto awareness beyond Latam

Although all statistics could bespeak to the idea that the Colombian public knows about the earth of cryptocurrencies, Javier Pastor highlights that there is great demand to brainwash the public and state entities about cryptocurrencies:

"The perception I have, not just in Republic of colombia, they don't know what this new technology is about. What this technology represents for countries is an opportunity to generate wealth and new jobs, in addition to generating a new investment movement."