Colombia

Retail_Trading_Status

Allowed-Regulated Unknown

Analysis ID: #69
Version: Archived
Created: 2025-04-12 06:42
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Executive Summary

Individual citizens and residents in Colombia are legally permitted to buy, sell, and hold cryptocurrencies, although crypto assets are not legal tender. The primary regulator is the Financial Superintendence of Colombia (SFC), which prohibits supervised financial institutions from directly engaging with crypto. Crypto platforms are subject to AML/CFT regulations enforced by the UIAF, including KYC requirements, and cryptocurrencies are classified as intangible assets for tax purposes by the DIAN. New bills are being proposed in early 2024/2025 to establish a formal licensing system for VASPs.

Key Pillars

Primary regulator: Financial Superintendence of Colombia (SFC), which oversees financial institutions and explores crypto integration through sandboxes.
Core compliance requirements: Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) regulations enforced by the Financial Information and Analysis Unit (UIAF), including Know-Your-Customer (KYC) procedures.
Licensing: There is currently no specific licensing regime solely for cryptocurrency exchanges or Virtual Asset Service Providers (VASPs), but new bills are being proposed to establish a formal licensing system.

Landmark Laws

Circular Letter 29 of 2014 from the SFC: Urged supervised entities not to engage with crypto and warned individuals about the inherent risks.
Resolution 314 of 2021: Mandates VASPs to implement AML/CFT risk management systems (like SARLAFT) and report suspicious transactions to the UIAF.

Considerations

Cryptocurrencies are classified as intangible assets for tax purposes by the National Tax and Customs Directorate (DIAN).
Colombian residents must declare their crypto holdings on their annual income tax returns, and profits from selling crypto are subject to income tax.
Holding crypto itself is generally not taxed, but generated income like staking rewards is.
Both BanRep and the SFC have issued warnings regarding the risks associated with crypto assets, including volatility, lack of backing, and potential for fraud.
Supervised financial institutions face significant restrictions, with the SFC generally prohibiting entities under its supervision from holding, investing in, or intermediating crypto transactions directly.

Notes

The SFC conducted a pilot project within its regulatory sandbox ("laArenera") from 2021, allowing supervised financial entities to partner with specific crypto platforms under controlled conditions to test cash-in/cash-out operations.
New bills are being proposed (e.g., in early 2024/2025) aiming to establish a formal licensing system for VASPs under the SFC.
The Colombian Peso remains the sole official currency; cryptoassets are not considered to be a foreign currency under national legislation.
While past attempts to pass comprehensive crypto regulation failed, new bills are being proposed.

Detailed Explanation

In Colombia, individual citizens and residents are legally permitted to buy, sell, and hold cryptocurrencies, and this activity is not explicitly prohibited by law. However, cryptocurrencies are not considered legal tender; the Colombian Peso remains the sole official currency. The Central Bank (Banco de la República - BanRep) and the Financial Superintendence of Colombia (Superintendencia Financiera de Colombia - SFC) have clarified that crypto assets are not classified as currency, money, securities, or cash equivalents under current Colombian law. Thus, while private parties can agree to use crypto, there is no legal obligation for anyone to accept them as a means of payment.

Supervised financial institutions face significant restrictions. The SFC has generally prohibited entities under its supervision (like banks) from holding, investing in, or intermediating crypto transactions directly, as highlighted by Circular Letter 29 of 2014. A major financial group recently launched an affiliated platform (Wenia, based offshore) allowing its bank customers to trade crypto, this does not represent direct operation by the Colombian banking entity itself. Crypto platforms operating in Colombia are subject to Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) regulations enforced by the Financial Information and Analysis Unit (UIAF). Resolution 314 of 2021 mandates VASPs to implement AML/CFT risk management systems (like SARLAFT) and report suspicious transactions to the UIAF, including Know-Your-Customer (KYC) procedures to identify users.

The National Tax and Customs Directorate (DIAN) classifies cryptocurrencies as intangible assets for tax purposes. Colombian residents must declare their crypto holdings on their annual income tax returns, and profits from selling crypto are subject to income tax. Holding crypto itself is generally not taxed, but generated income like staking rewards is. The SFC conducted a pilot project within its regulatory sandbox ("laArenera") from 2021, allowing supervised financial entities to partner with specific crypto platforms under controlled conditions to test cash-in/cash-out operations. This initiative aimed to explore risk management and potential future integration.

While past attempts to pass comprehensive crypto regulation failed, new bills are being proposed (e.g., in early 2024/2025) aiming to establish a formal licensing system for VASPs under the SFC, enhance consumer protection, and provide greater legal clarity. Both BanRep and the SFC have issued warnings regarding the risks associated with crypto assets, including volatility, lack of backing, and potential for fraud. While individuals can freely trade crypto, the environment is "Regulated" due to the mandatory application of AML/CFT rules via UIAF, tax reporting requirements via DIAN, and the SFC's active exploration through the sandbox and oversight over financial institutions' interactions.

Summary Points

Okay, here's the conversion of the provided report into a clear, well-structured bullet point format, focusing on readability and scannability:

Retail Cryptocurrency Trading Status in Colombia: Regulatory Analysis

I. Overall Regulatory Status:

Allowed-Regulated: Individuals are legally permitted to buy, sell, and hold cryptocurrencies in Colombia. However, this activity is regulated.

II. Key Regulatory Bodies and Their Roles:

Banco de la República (BanRep) - Central Bank:
- Clarifies that cryptocurrencies are not legal tender, currency, money, securities, or cash equivalents.
- Issues warnings about the risks associated with crypto assets.
Superintendencia Financiera de Colombia (SFC) - Financial Superintendence:
- Supervises financial institutions and restricts their direct involvement in crypto activities (holding, investing, intermediating).
- Conducted a regulatory sandbox ("laArenera") to explore crypto integration with supervised entities.
- Proposing a formal licensing system for VASPs.
Unidad de Información y Análisis Financiero (UIAF) - Financial Information and Analysis Unit:
- Enforces Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) regulations for crypto platforms.
- Mandates AML/CFT risk management systems (e.g., SARLAFT) for VASPs.
- Receives Suspicious Transaction Reports (STRs) from VASPs.
Dirección de Impuestos y Aduanas Nacionales (DIAN) - National Tax and Customs Directorate:
- Classifies cryptocurrencies as intangible assets for tax purposes.
- Requires Colombian residents to declare crypto holdings on annual income tax returns.

III. Important Legislation and Regulations:

Act 31/1992: Forms the basis for the Central Bank's position that cryptocurrencies are not legal tender.
Circular Letter 29 of 2014 (SFC): Urged supervised entities not to engage with crypto and warned individuals about the inherent risks.
Resolution 314 of 2021 (UIAF): Mandates AML/CFT compliance for Virtual Asset Service Providers (VASPs), including KYC and reporting requirements.
Tax Regulations (DIAN): Classify crypto as intangible assets, subject to income tax on profits from sales.
Proposed Legislation (Ongoing): New bills are being proposed to establish a formal licensing system for VASPs under the SFC, enhance consumer protection, and provide greater legal clarity.

IV. Requirements for Compliance:

AML/CFT Compliance (VASPs):
- Implement AML/CFT risk management systems (SARLAFT).
- Conduct Know-Your-Customer (KYC) procedures to identify users.
- Report suspicious transactions to the UIAF.
Tax Reporting (Individuals):
- Declare crypto holdings on annual income tax returns.
- Pay income tax on profits from selling crypto.
- Declare generated income like staking rewards.

V. Notable Restrictions or Limitations:

No Legal Tender Status: Cryptocurrencies are not legal tender in Colombia.
Restrictions on Financial Institutions: Supervised financial institutions are generally prohibited from directly holding, investing in, or intermediating crypto transactions.
Lack of Specific Crypto Law: There is no comprehensive law solely governing cryptocurrencies, leading to some regulatory ambiguity (but existing financial crime and tax frameworks apply).

VI. Recent Developments or Changes:

Regulatory Sandbox ("laArenera"): The SFC conducted a pilot project allowing supervised financial entities to partner with crypto platforms under controlled conditions.
Legislative Efforts: New bills are being proposed to establish a formal licensing system for VASPs under the SFC, enhance consumer protection, and provide greater legal clarity.
Increased Scrutiny: Increased focus on AML/CFT compliance and tax reporting.
Financial Group Affiliated Platform: A major financial group recently launched an affiliated platform (Wenia, based offshore) allowing its bank customers to trade crypto, but this does not represent direct operation by the Colombian banking entity itself.
DIAN Concepto Unificado Criptoactivos (Oct 2023): Clarifies DIAN's position on crypto assets for tax purposes.

Full Analysis Report

Report on the Current Status of Retail Cryptocurrency Trading in Colombia

Topic: Retail_Trading_Status
Description: Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued).

1. Current Status: Allowed-Regulated

2. Detailed Narrative Explanation:

Individual citizens and residents in Colombia are legally permitted to buy, sell, and hold cryptocurrencies. This activity is not prohibited by law for individuals, making Colombia a significant market for crypto assets in Latin America [2, 30]. However, the regulatory landscape is complex and evolving, leading to the classification of "Allowed-Regulated," albeit with important nuances.

Legal Status of Cryptocurrencies: Cryptocurrencies are not considered legal tender in Colombia; the Colombian Peso remains the sole official currency [3, 11, 24]. Both the Central Bank (Banco de la República - BanRep) and the Financial Superintendence of Colombia (Superintendencia Financiera de Colombia - SFC) have clarified that crypto assets are not classified as currency, money, securities, or cash equivalents under current Colombian law [3, 6, 7]. Consequently, there is no legal obligation for anyone to accept cryptocurrencies as a means of payment, although private parties are free to agree to use them [3, 11].
Individual Activity: Despite the lack of legal tender status, individuals are free to acquire, hold, and trade cryptocurrencies at their own risk [2, 3]. There are no specific laws banning this activity for retail users [3, 30]. Colombia has a significant number of crypto users, estimated at over five million, with substantial transaction volumes [2, 4, 8].
Regulation of Financial Institutions: Supervised financial institutions face significant restrictions. The SFC has generally prohibited entities under its supervision (like banks) from holding, investing in, or intermediating crypto transactions directly [3, 7, 18, 32]. Circular Letter 29 of 2014 from the SFC urged supervised entities not to engage with crypto and warned individuals about the inherent risks [3]. While a major financial group recently launched an affiliated platform (Wenia, based offshore) allowing its bank customers to trade crypto, this does not represent direct operation by the Colombian banking entity itself [3].
Regulation of Crypto Platforms (VASPs): Currently, there is no specific licensing regime solely for cryptocurrency exchanges or Virtual Asset Service Providers (VASPs) in Colombia [2, 3]. However, this does not mean the sector is entirely unregulated.
- AML/CFT Framework: Crypto platforms operating in Colombia are subject to Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) regulations enforced by the Financial Information and Analysis Unit (UIAF) [2, 6, 14]. Resolution 314 of 2021 mandates VASPs to implement AML/CFT risk management systems (like SARLAFT) and report suspicious transactions to the UIAF [6, 20, 25, 32]. This includes Know-Your-Customer (KYC) procedures to identify users [6, 14, 20]. Some sources indicate reporting thresholds for certain cash transactions [20, 25].
- Taxation: The National Tax and Customs Directorate (DIAN) classifies cryptocurrencies as intangible assets for tax purposes [3, 5, 6]. Colombian residents must declare their crypto holdings on their annual income tax returns, and profits from selling crypto are subject to income tax (rates vary for individuals and companies) [2, 5, 6, 12, 17, 34]. Holding crypto itself is generally not taxed, but generated income like staking rewards is [12].
- Regulatory Sandbox ("laArenera"): The SFC conducted a pilot project within its regulatory sandbox ("laArenera") from 2021, allowing supervised financial entities to partner with specific crypto platforms under controlled conditions to test cash-in/cash-out operations [2, 6, 16, 27, 28]. This initiative, which concluded or is concluding, aimed to explore risk management and potential future integration, demonstrating regulatory engagement and oversight [13, 16, 22].
Legislative Efforts: While past attempts to pass comprehensive crypto regulation failed, new bills are being proposed (e.g., in early 2024/2025) aiming to establish a formal licensing system for VASPs under the SFC, enhance consumer protection, and provide greater legal clarity [2, 4, 8, 9, 10, 15, 21]. This signals a move towards a more formalized regulatory framework.
Official Warnings: Both BanRep and the SFC have issued warnings regarding the risks associated with crypto assets, including volatility, lack of backing, and potential for fraud [3, 24, 32].

In summary, while individuals can freely trade crypto, the environment is "Regulated" due to the mandatory application of AML/CFT rules via UIAF, tax reporting requirements via DIAN, and the SFC's active exploration through the sandbox and oversight over financial institutions' interactions. The lack of a bespoke crypto law creates some ambiguity, but existing financial crime and tax frameworks apply, and specific regulations are actively being developed [4, 6, 9, 15].

3. Relevant Excerpts:

On Legality for Individuals: "Colombia has a careful yet welcoming view on cryptocurrency. It's not official money, but people can freely buy, sell, and keep crypto." [2] / "Yes, individuals are allowed to purchase, sell, and possess cryptocurrency, but it is not legal tender..." [2] / "...there is no explicit prohibition of the activities mentioned above [exchange, custody, borrowing/lending, yield/staking], even though they are currently unregulated under Colombian law [specifically for crypto]." [3]
On Lack of Legal Tender Status: "cryptoassets are not considered to be a foreign currency under national legislation which means that they cannot be used to pay debts under the exchange rate regime." [3] / "...cryptocurrencies (CC) are not recognized in Colombia as a legal tender currency based on Act 31/1992." [24] / "They are not currency... They are not money for legal purposes... They are not a currency... They are not cash or cash equivalents... There is no obligation to receive them as a means of payment." [6]
On AML/KYC Regulation (UIAF): "Yes, every crypto firm in Colombia needs to check identity verifications and report any suspicious transactions to the Unidad de Información y Análisis Financiero (UIAF) from 2022." [2] / "Resolution 314-2021: obliges companies that provide virtual asset services to send Suspicious Transaction Reports (STRs) to the Unit [UIAF] when they become aware of possible money laundering and/or terrorist financing transactions or activities." [6] / "Exchange platforms identify their customers through know-your-customer (KYC) procedures and file several notices and reports to the authorities." [6]
On Tax Regulation (DIAN): "For tax purposes, cryptoassets are considered intangible assets. The DIAN established that “Colombian residents who have cryptoassets in their patrimony must declare them in their annual income tax return." [3] / "The DIAN considers cryptocurrency as an asset, and thus, it falls under the general tax regime... Any income derived from cryptocurrency, including capital gains from trading, should be declared in the annual income tax return." [12]
On Financial Institution Restrictions (SFC): "SFC prohibited supervised entities from having custody of, investing in or intermediating with digital currencies..." (referencing Circular Letter 29 of 2014) [3] / "The SFC has established that the entities under its vigilance are not authorized to custody, invest, intermediate or manage operations with cryptocurrencies." [32]
On Regulatory Sandbox ("laArenera"): "The SFC developed a pilot project in the sandbox (laArenera SFC), where specific risk management and consumer protection measures adopted by the entities supervised by the SFC were tested to manage the risks inherent to the process of linking VASPs to the financial system..." [16, 22] / "The Financial Superintendence has created The Sandbox, which allows some cryptoassets businesses to operate in Colombia [in partnership with supervised entities]." [6]
On Lack of Specific Crypto Law (but evolving): "Several public authorities have pointed out that Colombia does not have a law or decree that provides a comprehensive and integral regulatory framework for the cryptoasset market." [6] / "Historically speaking, Colombia has lacked specific legislation governing cryptocurrencies. That has made this niche largely unregulated." [9] / "Colombian lawmakers have launched a fresh bid to regulate the nation's growing cryptocurrency industry... The proposed bill... proposes a licensing system for Virtual Asset Service Providers (VASPs)..." [4]

4. Source Links:

[2] Coinfomania - Cryptocurrency Regulations in Colombia: https://coinfomania.com/cryptocurrency-regulations-in-colombia/
[3] CMS Law - Expert Guide to Crypto Regulation in Colombia: https://cms.law/en/int/expert-guides/cms-expert-guide-to-crypto-regulation/colombia
[4] Digital Watch Observatory - Colombian lawmakers push for crypto regulations: https://dig.watch/updates/colombian-lawmakers-push-for-crypto-regulations
[5] Coinfomania - Crypto Taxation in Colombia: A Complete Guide: https://coinfomania.com/crypto-taxation-in-colombia-a-complete-guide/
[6] Elliptic - Colombia Country Guide (July 2022): https://www.elliptic.co/resources/country-guide-colombia
[7] Freeman Law - Colombia & Cryptocurrency: https://freemanlaw.com/colombia-cryptocurrency-laws-regulation-of-digital-currencies/
[8] Senado de la República (Colombian Senate Press) - Bill Proposed Feb 2024: https://www.senado.gov.co/index.php/prensa/noticias/3705-senado-tramitara-regulacion-del-mercado-de-criptomodenas-en-el-pais (Link might be specific to the date, search Senado news for "criptomonedas regulación febrero 2024")
[9] Impact Investing News - Colombian Cryptocurrency Regulations: https://impactinvesting.news/colombian-cryptocurrency-regulations-impact-stock-exchange-and-investors/
[10] La República - Colombia quiere regular las criptomonedas (Mar 2024): https://www.larepublica.co/finanzas/colombia-quiere-regular-las-criptomonedas-estos-son-los-riesgos-y-oportunidades-3812956
[11] Ámbito Jurídico - Congreso estudiará regulación para las criptomonedas: https://www.ambitojuridico.com/noticias/financiero-cambiario-y-seguros/congreso-estudiara-regulacion-para-las-criptomonedas
[12] SLEX - Crypto Tax in Colombia 2025: https://slex.io/blog/crypto-tax-in-colombia-2025-comprehensive-guide-to-regulations
[13] Bloomberg Línea - How Colombia's Crypto Regulations Might Look (July 2022): https://www.bloomberglinea.com/english/how-colombias-crypto-regulations-might-look/
[14] Bitcoin.com - Best Crypto Exchanges in Colombia for 2025: https://www.bitcoin.com/get-started/best-crypto-exchanges-colombia/
[15] Scorechain - Strengthening cryptocurrency regulations in Colombia (Sep 2024): https://www.scorechain.com/blog/strengthening-cryptocurrency-regulations-in-colombia-is-your-business-ready/
[16] IMF eLibrary - Colombia Staff Report (Mar 2024 - see Annex on FSAP): https://www.elibrary.imf.org/view/journals/002/2024/106/article-A002-en.xml (Specific link to Annex might require navigation)
[17] Bitcoin.com News - Colombian Tax Authority Warns... (Apr 2022): https://news.bitcoin.com/colombian-tax-authority-warns-about-consequences-of-not-declaring-crypto-related-taxes/
[18] ICLG - Fintech Laws and Regulations Colombia 2024-2025: https://iclg.com/practice-areas/fintech-laws-and-regulations/colombia
[20] KYC.io - Global Regulations Colombia: https://kyc.io/global-regulations-and-requirements-for-kyc-onboarding/colombia/
[21] Tirant Prime Colombia - Propuesta de regulación de criptoactivos (Feb 2025): https://prime.tirant.com/co/noticia/propuesta-de-regulacion-de-criptoactivos-en-colombia-un-nuevo-intento-legislativo-tirantonline-co-3790788
[22] IMF - Colombia 2024 Article IV Consultation Press Release (Mar 2024): https://www.imf.org/en/Publications/CR/Issues/2024/03/26/Colombia-2024-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-the-547577
[24] Banco de la República - Crypto-assets Technical Document (July 2018): https://repositorio.banrep.gov.co/bitstream/handle/20.500.12134/9518/be_1039.pdf (Original Link might differ, search BanRep repository for "Documento Técnico Criptomonedas")
[25] Bitcoin.com News - Crypto Users and Exchanges Must Now Report... (Feb 2022): https://news.bitcoin.com/crypto-users-and-exchanges-must-now-report-transactions-in-colombia/
[27] Lloreda Camacho - LATAM Fintech Regulation (Potentially dated, check publication year): https://www.lloredacamacho.com/wp-content/uploads/2022/11/LATAM-FINTECH-REGULATION-2022.pdf (Link may change, search source website)
[28] IDB - Colombia's First Blockchain Bond (Aug 2022): https://www.iadb.org/en/news/idb-group-and-davivienda-bank-issue-colombias-first-blockchain-bond
[30] CEX.IO - How to buy Crypto and Bitcoin in Colombia: https://cex.io/how-to-buy-crypto/colombia
[32] America Malls & Retail - Avances en la regulación de criptomonedas en Colombia (Jun 2024): https://americaretail-malls.com/colombia/avances-en-la-regulacion-de-criptomonedas-en-colombia/
[34] DIAN - Concepto Unificado Criptoactivos (Oct 2023): https://www.dian.gov.co/normatividad/Conceptos/Conceptos-Unificados/100202208-1621-Concepto-Unificado-Criptoactivos-17102023.pdf

**Report on the Current Status of Retail Cryptocurrency Trading in Colombia**

**Topic:** Retail_Trading_Status
**Description:** Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued).

**1. Current Status:** `Allowed-Regulated`

**2. Detailed Narrative Explanation:**

Individual citizens and residents in Colombia are legally permitted to buy, sell, and hold cryptocurrencies. This activity is not prohibited by law for individuals, making Colombia a significant market for crypto assets in Latin America [2, 30]. However, the regulatory landscape is complex and evolving, leading to the classification of "Allowed-Regulated," albeit with important nuances.

*   **Legal Status of Cryptocurrencies:** Cryptocurrencies are not considered legal tender in Colombia; the Colombian Peso remains the sole official currency [3, 11, 24]. Both the Central Bank (Banco de la República - BanRep) and the Financial Superintendence of Colombia (Superintendencia Financiera de Colombia - SFC) have clarified that crypto assets are not classified as currency, money, securities, or cash equivalents under current Colombian law [3, 6, 7]. Consequently, there is no legal obligation for anyone to accept cryptocurrencies as a means of payment, although private parties are free to agree to use them [3, 11].
*   **Individual Activity:** Despite the lack of legal tender status, individuals are free to acquire, hold, and trade cryptocurrencies at their own risk [2, 3]. There are no specific laws banning this activity for retail users [3, 30]. Colombia has a significant number of crypto users, estimated at over five million, with substantial transaction volumes [2, 4, 8].
*   **Regulation of Financial Institutions:** Supervised financial institutions face significant restrictions. The SFC has generally prohibited entities under its supervision (like banks) from holding, investing in, or intermediating crypto transactions directly [3, 7, 18, 32]. Circular Letter 29 of 2014 from the SFC urged supervised entities not to engage with crypto and warned individuals about the inherent risks [3]. While a major financial group recently launched an affiliated platform (Wenia, based offshore) allowing its bank customers to trade crypto, this does not represent direct operation by the Colombian banking entity itself [3].
*   **Regulation of Crypto Platforms (VASPs):** Currently, there is no specific licensing regime *solely* for cryptocurrency exchanges or Virtual Asset Service Providers (VASPs) in Colombia [2, 3]. However, this does not mean the sector is entirely unregulated.
    *   **AML/CFT Framework:** Crypto platforms operating in Colombia are subject to Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) regulations enforced by the Financial Information and Analysis Unit (UIAF) [2, 6, 14]. Resolution 314 of 2021 mandates VASPs to implement AML/CFT risk management systems (like SARLAFT) and report suspicious transactions to the UIAF [6, 20, 25, 32]. This includes Know-Your-Customer (KYC) procedures to identify users [6, 14, 20]. Some sources indicate reporting thresholds for certain cash transactions [20, 25].
    *   **Taxation:** The National Tax and Customs Directorate (DIAN) classifies cryptocurrencies as intangible assets for tax purposes [3, 5, 6]. Colombian residents must declare their crypto holdings on their annual income tax returns, and profits from selling crypto are subject to income tax (rates vary for individuals and companies) [2, 5, 6, 12, 17, 34]. Holding crypto itself is generally not taxed, but generated income like staking rewards is [12].
    *   **Regulatory Sandbox ("laArenera"):** The SFC conducted a pilot project within its regulatory sandbox ("laArenera") from 2021, allowing supervised financial entities to partner with specific crypto platforms under controlled conditions to test cash-in/cash-out operations [2, 6, 16, 27, 28]. This initiative, which concluded or is concluding, aimed to explore risk management and potential future integration, demonstrating regulatory engagement and oversight [13, 16, 22].
*   **Legislative Efforts:** While past attempts to pass comprehensive crypto regulation failed, new bills are being proposed (e.g., in early 2024/2025) aiming to establish a formal licensing system for VASPs under the SFC, enhance consumer protection, and provide greater legal clarity [2, 4, 8, 9, 10, 15, 21]. This signals a move towards a more formalized regulatory framework.
*   **Official Warnings:** Both BanRep and the SFC have issued warnings regarding the risks associated with crypto assets, including volatility, lack of backing, and potential for fraud [3, 24, 32].

In summary, while individuals can freely trade crypto, the environment is "Regulated" due to the mandatory application of AML/CFT rules via UIAF, tax reporting requirements via DIAN, and the SFC's active exploration through the sandbox and oversight over financial institutions' interactions. The lack of a bespoke crypto law creates some ambiguity, but existing financial crime and tax frameworks apply, and specific regulations are actively being developed [4, 6, 9, 15].

**3. Relevant Excerpts:**

*   **On Legality for Individuals:** "Colombia has a careful yet welcoming view on cryptocurrency. It's not official money, but people can freely buy, sell, and keep crypto." [2] / "Yes, individuals are allowed to purchase, sell, and possess cryptocurrency, but it is not legal tender..." [2] / "...there is no explicit prohibition of the activities mentioned above [exchange, custody, borrowing/lending, yield/staking], even though they are currently unregulated under Colombian law [specifically for crypto]." [3]
*   **On Lack of Legal Tender Status:** "cryptoassets are not considered to be a foreign currency under national legislation which means that they cannot be used to pay debts under the exchange rate regime." [3] / "...cryptocurrencies (CC) are not recognized in Colombia as a legal tender currency based on Act 31/1992." [24] / "They are not currency... They are not money for legal purposes... They are not a currency... They are not cash or cash equivalents... There is no obligation to receive them as a means of payment." [6]
*   **On AML/KYC Regulation (UIAF):** "Yes, every crypto firm in Colombia needs to check identity verifications and report any suspicious transactions to the Unidad de Información y Análisis Financiero (UIAF) from 2022." [2] / "Resolution 314-2021: obliges companies that provide virtual asset services to send Suspicious Transaction Reports (STRs) to the Unit [UIAF] when they become aware of possible money laundering and/or terrorist financing transactions or activities." [6] / "Exchange platforms identify their customers through know-your-customer (KYC) procedures and file several notices and reports to the authorities." [6]
*   **On Tax Regulation (DIAN):** "For tax purposes, cryptoassets are considered intangible assets. The DIAN established that “Colombian residents who have cryptoassets in their patrimony must declare them in their annual income tax return." [3] / "The DIAN considers cryptocurrency as an asset, and thus, it falls under the general tax regime... Any income derived from cryptocurrency, including capital gains from trading, should be declared in the annual income tax return." [12]
*   **On Financial Institution Restrictions (SFC):** "SFC prohibited supervised entities from having custody of, investing in or intermediating with digital currencies..." (referencing Circular Letter 29 of 2014) [3] / "The SFC has established that the entities under its vigilance are not authorized to custody, invest, intermediate or manage operations with cryptocurrencies." [32]
*   **On Regulatory Sandbox ("laArenera"):** "The SFC developed a pilot project in the sandbox (laArenera SFC), where specific risk management and consumer protection measures adopted by the entities supervised by the SFC were tested to manage the risks inherent to the process of linking VASPs to the financial system..." [16, 22] / "The Financial Superintendence has created The Sandbox, which allows some cryptoassets businesses to operate in Colombia [in partnership with supervised entities]." [6]
*   **On Lack of Specific Crypto Law (but evolving):** "Several public authorities have pointed out that Colombia does not have a law or decree that provides a comprehensive and integral regulatory framework for the cryptoasset market." [6] / "Historically speaking, Colombia has lacked specific legislation governing cryptocurrencies. That has made this niche largely unregulated." [9] / "Colombian lawmakers have launched a fresh bid to regulate the nation's growing cryptocurrency industry... The proposed bill... proposes a licensing system for Virtual Asset Service Providers (VASPs)..." [4]

**4. Source Links:**

*   [2] Coinfomania - Cryptocurrency Regulations in Colombia: https://coinfomania.com/cryptocurrency-regulations-in-colombia/
*   [3] CMS Law - Expert Guide to Crypto Regulation in Colombia: https://cms.law/en/int/expert-guides/cms-expert-guide-to-crypto-regulation/colombia
*   [4] Digital Watch Observatory - Colombian lawmakers push for crypto regulations: https://dig.watch/updates/colombian-lawmakers-push-for-crypto-regulations
*   [5] Coinfomania - Crypto Taxation in Colombia: A Complete Guide: https://coinfomania.com/crypto-taxation-in-colombia-a-complete-guide/
*   [6] Elliptic - Colombia Country Guide (July 2022): https://www.elliptic.co/resources/country-guide-colombia
*   [7] Freeman Law - Colombia & Cryptocurrency: https://freemanlaw.com/colombia-cryptocurrency-laws-regulation-of-digital-currencies/
*   [8] Senado de la República (Colombian Senate Press) - Bill Proposed Feb 2024: https://www.senado.gov.co/index.php/prensa/noticias/3705-senado-tramitara-regulacion-del-mercado-de-criptomodenas-en-el-pais (Link might be specific to the date, search Senado news for "criptomonedas regulación febrero 2024")
*   [9] Impact Investing News - Colombian Cryptocurrency Regulations: https://impactinvesting.news/colombian-cryptocurrency-regulations-impact-stock-exchange-and-investors/
*   [10] La República - Colombia quiere regular las criptomonedas (Mar 2024): https://www.larepublica.co/finanzas/colombia-quiere-regular-las-criptomonedas-estos-son-los-riesgos-y-oportunidades-3812956
*   [11] Ámbito Jurídico - Congreso estudiará regulación para las criptomonedas: https://www.ambitojuridico.com/noticias/financiero-cambiario-y-seguros/congreso-estudiara-regulacion-para-las-criptomonedas
*   [12] SLEX - Crypto Tax in Colombia 2025: https://slex.io/blog/crypto-tax-in-colombia-2025-comprehensive-guide-to-regulations
*   [13] Bloomberg Línea - How Colombia's Crypto Regulations Might Look (July 2022): https://www.bloomberglinea.com/english/how-colombias-crypto-regulations-might-look/
*   [14] Bitcoin.com - Best Crypto Exchanges in Colombia for 2025: https://www.bitcoin.com/get-started/best-crypto-exchanges-colombia/
*   [15] Scorechain - Strengthening cryptocurrency regulations in Colombia (Sep 2024): https://www.scorechain.com/blog/strengthening-cryptocurrency-regulations-in-colombia-is-your-business-ready/
*   [16] IMF eLibrary - Colombia Staff Report (Mar 2024 - see Annex on FSAP): https://www.elibrary.imf.org/view/journals/002/2024/106/article-A002-en.xml (Specific link to Annex might require navigation)
*   [17] Bitcoin.com News - Colombian Tax Authority Warns... (Apr 2022): https://news.bitcoin.com/colombian-tax-authority-warns-about-consequences-of-not-declaring-crypto-related-taxes/
*   [18] ICLG - Fintech Laws and Regulations Colombia 2024-2025: https://iclg.com/practice-areas/fintech-laws-and-regulations/colombia
*   [20] KYC.io - Global Regulations Colombia: https://kyc.io/global-regulations-and-requirements-for-kyc-onboarding/colombia/
*   [21] Tirant Prime Colombia - Propuesta de regulación de criptoactivos (Feb 2025): https://prime.tirant.com/co/noticia/propuesta-de-regulacion-de-criptoactivos-en-colombia-un-nuevo-intento-legislativo-tirantonline-co-3790788
*   [22] IMF - Colombia 2024 Article IV Consultation Press Release (Mar 2024): https://www.imf.org/en/Publications/CR/Issues/2024/03/26/Colombia-2024-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-the-547577
*   [24] Banco de la República - Crypto-assets Technical Document (July 2018): https://repositorio.banrep.gov.co/bitstream/handle/20.500.12134/9518/be_1039.pdf (Original Link might differ, search BanRep repository for "Documento Técnico Criptomonedas")
*   [25] Bitcoin.com News - Crypto Users and Exchanges Must Now Report... (Feb 2022): https://news.bitcoin.com/crypto-users-and-exchanges-must-now-report-transactions-in-colombia/
*   [27] Lloreda Camacho - LATAM Fintech Regulation (Potentially dated, check publication year): https://www.lloredacamacho.com/wp-content/uploads/2022/11/LATAM-FINTECH-REGULATION-2022.pdf (Link may change, search source website)
*   [28] IDB - Colombia's First Blockchain Bond (Aug 2022): https://www.iadb.org/en/news/idb-group-and-davivienda-bank-issue-colombias-first-blockchain-bond
*   [30] CEX.IO - How to buy Crypto and Bitcoin in Colombia: https://cex.io/how-to-buy-crypto/colombia
*   [32] America Malls & Retail - Avances en la regulación de criptomonedas en Colombia (Jun 2024): https://americaretail-malls.com/colombia/avances-en-la-regulacion-de-criptomonedas-en-colombia/
*   [34] DIAN - Concepto Unificado Criptoactivos (Oct 2023): https://www.dian.gov.co/normatividad/Conceptos/Conceptos-Unificados/100202208-1621-Concepto-Unificado-Criptoactivos-17102023.pdf

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