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Colombian President Promises to Cut Rent Taxes for Crypto Firms

Colombian President Ivan Duque has recently promised to cut taxes for cryptocurrency and blockchain startups, local newspaper El Tiempo reported Wednesday, August 29.  

Duque delivered an opening message during ANDICOM, an international congress on information and communications technology (ICT) held annually in Cartagena de Indias, Colombia. A recording of his speech is now available on YouTube.

President confessed that he was “obsessed” with technology, especially with robotics and artificial intelligence (AI). He further stressed that Colombia needs its own regulator for the ICT industry and promised to establish a high council for the transformation and digital society.

According to Duque, the use of advanced technologies might help the state tackle corruption along with improving such areas as security, justice and medicine. He proposed to leverage blockchain and AI to track public funds and detect abnormalities.

Moving on to the crypto industry, Duque promised to relieve cryptocurrency-related businesses of rent taxes for as long as five years, provided they generate a certain number of new jobs.

Ivan Duque is the current president of Colombia. He took office in August 2018 after winning the elections earlier in May. The politician has a strong financial background, previously holding significant positions in the country’s Ministry of Finance and Inter-American Development Bank.

As Cointelegraph reported earlier, Colombian senate is similarly optimistic about blockchain, stating that it “could change lives” after a debate in June. In addition to that, a national blockchain association was established in the country in May.

At the same time, the country’s financial industry has been quite sceptical about cryptocurrencies so far. For instance, at one point Colombian banks closed all accounts of a South American crypto exchange Buda.com, as Cointelegraph reported June 2018.

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Colombian Banks Close All Accounts of S. American Crypto Exchange Buda

Colombian banks closed all the accounts of South American crypto exchange Buda.com, local news outlet Diario Bitcoin reported June 8, citing an email the company sent to its clients.

According to the email, the move was spontaneous, the banks confirming that the accounts had been closed without providing further explanation.

The crypto exchange reported soon after the news that it was experiencing technical difficulties, but would fully resume services June 13.  

Buda’s Colombian CEO Alejandro Beltran confirmed the situation to local industry media Cripto247. He also named the three banks that blocked Buda’s accounts: Bancolombia, BBVA and Davivienda.

Cripto 247 links the banks’ decision to an internal letter from the Colombian financial control officer that was circulated in February. The letter was a reminder that banks are not authorized to interact with crypto platforms.

Nevertheless, Beltran told reporters he interprets the letter as a recommendation and that banks are in fact not obligated to comply.

On June 7, the same day banks closed Buda’s accounts, the Colombian Senate held a debate on the potential of cryptocurrency and blockchain in the country. The senator of Colombia’s Green Alliance party, Antonio Navarro Wolff, said that blockchain “could change the lives of Colombians”.

As Cointelegraph reported in March, Buda had already faced legal issues when a number of Chilean banks closed its accounts along with two other crypto platforms. The three crypto platforms then filed a suit to confront the decision.

Later in April, Chile’s anti-monopoly court took Buda’s side and ordered the re-opening of its accounts at two major Chilean banks.

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Colombian Senate Debate: ‘Blockchain Could Change Lives’

The Colombian Senate held a debate on cryptocurrencies and blockchain “as mechanisms to modernize the digital economy” on Wednesday, according to a Senate press release published today, June 7.

The Third Committee of the Senate was convened by the senator of Colombia’s Green Alliance party, Antonio Navarro Wolff, with participants including the Colombian central bank, the Ministry of Finance, the ICT Ministry, and Colombia’s Financial Superintendent.

Navarro Wolff opened his speech by advocating that the Colombian state investigate blockchain “in greater depth,” saying that the technology “could change the lives of Colombians” in its application across the administrative, economic and political spheres.

The senator mentioned blockchain’s potential to reinforce the security and transparency of the electoral system, facilitate smart contracts, and benefit the management of public services.

Navarro Wolff characterized both cryptocurrencies and blockchain as “mechanisms to modernize the country’s digital economy.” He also noted that digital assets have come to Colombians’ attention following the meteoric rise of crypto markets in 2017, with widening interest raising the need for regulatory protections. To this end, he appealed to the Ministry of Finance to pursue both implementation and regulatory oversight of the new technologies.

A representative from Colombia’s Financial Superintendent spoke of a new taskforce, dubbed INNOVA, that was recently founded to investigate the uses of blockchain, as well as to promote “prudence and protection of citizens.”  

For his part, Juanita Rodríguez of the ICT Ministry said that blockchain systems “generate confidence and are safe,” and should be pursued if the country’s digital economy is to thrive.

Last month, the Colombia Blockchain Association was launched in order to act as an interlocutor to the national government and encourage “informed” adoption of new financial technologies, without compromising the decentralized principles of blockchain. A Green Alliance representative similarly warned against stifling overregulation of the emerging industry, suggesting that disintermediated systems would help to allay Colombians’ “distrust” of the traditional financial sector.

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Colombia: Newly Formed Blockchain Association Aims for Dialogue With Government

Six public and private Colombian companies have joined forces to launch the Colombia Blockchain Association, Spanish news agency EFE reported May 17. The Association describes itself as aiming to support the country’s crypto and blockchain ecosystems and to advise the national government on matters concerning regulation of the crypto sphere.

The companies involved are Buda Colombia, Bitcoin Colombia, Cajero.co, IntiColombia, Panda Group and RSK. Representatives from each, as well as Mauricio Tovar – co-director of  inTIColombia, a research group of the National University of Colombia – reportedly attended an event this Wednesday in Bogota to discuss the agenda of the new organization.

As Diario Bitcoin reports, Tovar spoke out at the event against an “abusive” traditional financial sector that encumbers Colombians with unnecessary costs. Citizens “distrust” the current system, he suggested. He said the new association should act as an interlocutor to the state in order to encourage the “informed” adoption of new financial technologies, without compromising the decentralized principles of blockchain, as well as to prevent stifling overregulation.

Buda CEO Alejandro Beltrán contributed his perspective on the potential future of crypto across Latin America, noting that there are estimated to be over 200 mln unbanked citizens in the continent who could be served by a crypto economy. He also noted how complicated it currently is for migrants to send remittances back to their countries of origin using fiat money.

Beyond financial applications, event participants reportedly discussed the use of blockchain in other fields, including information security, intellectual property, the energy sector, electoral systems and real estate registers.

Last year, the UN’s Economic Commission for Latin America and the Caribbean (ECLAC) released a report stating that blockchain technology could help address problems facing the ailing banking sector across the continent. Countries in the region with underbanked populations, such as Venezuela, have been encouraging their citizens to educate themselves about crypto. Under pressure from international sanctions, Venezuela launched an oil-backed national cryptocurrency, the Petro, earlier this year.

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Spanish Authorities Arrest 11 In Crypto Money Laundering Ring

Operation Tulipan Blanca (White Tulip), coordinated by Europol and conducted by the Spanish Guardia Civil, has resulted in the arrest of 11 individuals for laundering more than EUR 8 mln via cryptocurrencies, according to a Europol press release April 9.

According to Europol, the investigation was centered around a crime ring which launders money from narcotics sales using credit cards and cryptocurrencies.

Launderers would pick up the illicit funds in cash, after which they would deposit them in small amounts into hundreds of third bank accounts. Since the cash was already circulating in the financial system, the ring just needed to transfer the illicit funds back to the drug dealers in Colombia. The criminals would then acquire credit cards linked with the accounts, and travel to Colombia where they would make withdrawals.

Once the criminals realized that cash withdrawals and bank operations were easy to track, they used cryptocurrencies instead, mainly Bitcoin. The suspects converted illicit funds to Bitcoin through an exchange, which they then changed to Colombian pesos and deposited into Colombian bank accounts the same day.

Through collaboration with Finnish authorities, police were able to establish that the exchange being used by the criminal ring was located in Finland, and collect the necessary information to track the culprits.

137 individuals are still being investigated by the Guardia Civil. The investigation shows that the suspects deposited over EUR 8 mln into 174 different bank accounts. Europol says it has organized special training “to assist law enforcement officers in identifying the use of cryptocurrencies by organized crime networks.”

Cointelegraph reported earlier today that the US Department of Justice (DoJ) seized backpage.com on charges that it laundered nearly half a billion dollars in illegal revenue, some via cryptocurrencies.

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Colombian Financial Watchdog Joins R3 Blockchain Consortium

A Colombian financial regulator has become the latest member of the R3 blockchain consortium.

With the move – which focuses on developing blockchains for enterprise – the Superintendencia Financiera de Colombia (SFC) indicated it plans to stay “up-to-date on latest advances and implementations” of distributed ledger technology (DLT) in financial services sector, according to a release.

The Colombian financial superintendent, Jorge Castaño Gutierrez, said the move marks a “significant step for the entity,” as blockchain technology is bringing greater innovation across financial systems.

He stated:

“This agreement with R3 contributes to the strategy we set in motion with the creation of the FinTech Group within the Superintendencia to learn the uses of this technology, which will provide efficiency and security of information to be able to accompany, support and endorse different processes within the industry.”

The move marks an addition to R3’s growing number regulatory members.

In recent months, the Chilean banking regulator, the SBIF, and Quebec’s financial regulator, the Autorite des marches financiers, have both announced their entrance into R3’s portfolio, which now comprises of more than 100 financial institutions, banks, professional services companies and technology firms.

Bogota, Colombia image via Shutterstock

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