Definitions and supervision – Uruguay is taking a major step in the legalization of cryptocurrencies, with a new bill that should bring a modicum of regulatory clarity for players in the sector in the country.
Uruguay: a bill for cryptocurrencies
In 2021, it was a flop. Uruguayan Senator Juan Sartori proposed a bill in August last year that would have legalized virtual assets. Bad timing or political games against cryptocurrencies, this project was not adopted.
It is now the turn of the Uruguayan executive to move forward on this ground, by proposing a bill which would place Bitcoin, cryptocurrencies, and digital assets in general, under the legal supervision of the country’s central bank.
Bitcoin under the supervision of the Superintendent of the central bank
The regulatory framework submitted to Parliament provides for the creation of a “new category” of companiesfor virtual asset providers (VASP), which are defined as organizations that professionally and regularly offer virtual services to third parties.
These services include the safekeeping and exchange of one virtual asset for another, or for fiat currency.
If the Senate and the Chamber of Deputies give the green light to this bill, the Superintendent of Financial Services (SSF), which is an entity of the Uruguayan central bank, would then have legal powers to ultimately supervise these virtual asset providers established in the country.
But this regulatory framework also provides legal obligations for “entities that operate with virtual assets” in Uruguay, without being part of the country’s financial system.
These organizations, like crypto platforms that would offer their services in Uruguay without having local offices there, will have to comply with the requirements of global anti-money laundering standards.
Such a provision implies that Uruguayans who go through these crypto exchanges, will have to submit to a KYC procedureunder penalty of sanctions from the authorities against recalcitrant platforms.
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A regulation to define and classify digital assets in Uruguay
The bill thus defines relatively clearly the central bank’s scope of supervision of cryptocurrencies. To the legal definition of a PSAV, is added that of virtual assets, which would be legally considered as:
“virtual representation of value or contractual rights that can be stored, transferred, and traded electronically using distributed ledger technology (DLT) or similar technologies”
The bill explicitly clarifies that blockchains fall under the category of distributed ledger technologies.
The text also advances a virtual asset classification proposalwhich can be categorized as titles, as utility, or labeled as “stable” – for central bank stablecoins and virtual currencies. Bitcoin (BTC) or Ether (ETH) would belong to the category of virtual trading assets.
Crypto companies are showing growing interest in South American countries, some of which, such as Uruguay and Brazil, have taken the necessary steps to offer a clear regulatory framework to the industry.
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