Ecuador intends to issue regulation on cryptocurrencies in 2022. This was stated by Banco Central del Ecuador (PIB) manager Guillermo Avellán, in an interview with Bloomberg Linea.
Crypto regulation in Ecuador
Ecuador’s plan is to become a financial hub by taking advantage of the fact that it is the only South American economy that has the dollar as its currency, so it relies on a stable currency. But to expand financial inclusion it also intends to give a clear definition of cryptocurrencies. It is not about making them legal tender, because, as Guillermo Avellán explained, in his opinion cryptocurrencies are too volatile. So in Ecuador the experience of El Salvador will not be repeated, even though, Avellán says, cryptocurrencies cannot be ignored:
“The Central Bank is working on a project to regulate cryptocurrencies, bearing in mind that the Monetary Code establishes that the dollar is the only legal tender in the country. But we are working on a regulation to be submitted to the Monetary Board for review and approval. This regulation does not imply that cryptocurrencies are going to become legal tender, as happened in El Salvador, but they are a reality and we cannot be on the sidelines of that. We must keep in mind that cryptocurrencies are an investment asset, but given their high volatility, it is very complicated to consider them as legal tender”.
The law that will be passed will serve to define the limits of the use of cryptocurrencies in the country, aimed also at avoiding abuse or illegality.
According to Guillermo Avellán, the citizens of Ecuador will benefit from a regulatory clarity that will define how they can use cryptocurrencies.
The law will be enacted as early as 2022, thus becoming fully operational.
The use of Bitcoin and cryptocurrencies in Ecuador.
In Ecuador, only 2.73% of the population owns cryptocurrencies, amounting to just under 500,000 people. Bitcoin trading is not illegal in the country, but it is prohibited to use it as a payment system. The problem is that the country is not very accustomed to the use of electronic money so much so that even in 2015 the introduction of Dinero Electronico did not make too much of a dent in the hearts of citizens, as more than half of people remained unbanked.
To increase financial inclusion, the government plans to rely on smartphones, as 8 out of 10 citizens own one.
Cryptocurrencies could promote inclusion, but it will be up to the government to facilitate them and not ban them.
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