06 Jan 2022 · 2 min read

Peru, Uruguay Edge Closer to Crypto Regulation with Draft Law, Policy Advisory Report

Vinicunca — also known as the Mountain of Seven Colors, or more simply Rainbow Mountain, in Peru. Source: Adobe/emperorcosar

 

Governments in South America are gearing up to regulate crypto in the year ahead – with lawmakers in Peru and Uruguay readying legislation and draft proposals.

According to El Pais Financiero and documents posted on the Peruvian confessional website, MPs including José Elías Ávalos of the opposition Podemos Peru Party, have unveiled a draft law that proposes to create a wide-scoped “framework” for “the commercialization of cryptoassets.” The bill “aims to regulate virtual asset service providers,” namely “crypto exchanges and digital wallet [providers].”

The bill also proposes creating legal definitions for terms such as “cryptoassets,” “cryptography” and “blockchain.” If passed, it would require exchanges and wallet operators to register with the Superintendencia de Banca, Seguros y AFP (SBS), the financial regulator that oversees banking, securities, and pension funds in Peru.

The bill would also force providers to make it clear to their customers that all crypto-related transactions in Peru are made at citizens’ own risk, and that they are all “irreversible.”

The draft bill was co-signed by three other MPs and added that the governance of the sector would be overseen by the SBS, in conjunction with the nation’s central bank and its markets regulator. It will head to the relevant parliamentary committee, and if it makes it past that obstacle, will be slated for a vote in Congress.

Furthermore, the bill, if adopted, would oblige crypto operators to abide by anti-money laundering protocols by reporting “potentially illicit operations” made using crypto to the SBS’ Financial Intelligence Unit.

Meanwhile, in Uruguay, the Central Bank (known locally as the BCU) has published a document that suggests “preparing the ground for possible regulations,” reported Infobae.

The document is titled “A conceptual framework for the regulatory treatment of virtual assets in Uruguay," and was created after consulting with the conventional financial sector, as well as virtual asset service providers (VASPs), tech firms, legal consultancies, public bodies, academics and regulators.

The document’s authors wrote:

“Given the rapid development of […] virtual assets [...] both globally and domestically, [we] consider it necessary to provide greater certainty and clarity on this phenomenon and its regulatory considerations. [Our] aim is to ensure that its development in the domestic market, as well as its use in the financial [sector], are safe.”

The authors added that crypto could “constitute an important source of risk for price and financial stability,” and that it ran the risk of “compromising the aim of promoting soundness, solvency, efficiency, and development in the financial and payments system."

The BCU also stated that cryptoassets on “their current scale” were “relatively low” in adoption, “the increasing attention and explosive growth” of crypto “in recent times worldwide” had underlined the need for “imminent attention on the domestic level.”
_____
Learn more: 
- 2022 Crypto Regulation Trends: Focus on DeFi, Stablecoins, NFTs, and More
- New El Salvador Laws Will Help Bitcoiners Who Want to Move to the Country, Says Gov’t

- New AML Legislation Won't Forbid Individuals to Hold Crypto, Says Estonia’s Ministry of Finance
- Argentine Crypto Firm Sets up El Salvador Base to Side-step Fiscal Reporting Duties