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Colombia and Peru: dialogue on regulations for FinTechs and cryptocurrency companies

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Colombia and Peru: dialogue on regulations for FinTechs and cryptocurrency companies

In Peru, a sandbox will be implemented for FinTech companies, among which are some of the cryptocurrency industry. A similar framework already exists in Colombia.

Sandbox, in English, means “sandbox”. It is used in reference to the sandboxes that are put in the parks for children to play. It is a place where the risk is controlled because the floor is sandy and any fall is soft, and the parents may be closely monitoring the children.

This litter box has been brought into the world of technological innovation. In some countries, authorities are creating an environment in which innovations can be tested with controlled risks and with close involvement of regulators .

This topic was broadly addressed on June 16 by Carlos Eduardo Bernos, country manager of buda.com in Peru, who served as moderator to discuss the topic “Regulatory Sandbox: Analysis and international experience.” A panel that included the participation of Alejandro Beltrán, country manager of buda.com in Colombia and Abel de Revoredo, lawyer and ambassador of the Asociación Gente de Perú.

Colombia: the sandbox seeks to evaluate operations with cryptocurrencies

During the conversation the topic “How does the Sandbox work in Colombia?” Was addressed. In this regard, Beltrán clarified that this Sandbox is not regulatory in nature, but seeks to evaluate cryptocurrency purchase and sale operations, processes that are regulated by the Financial Superintendence of that country .

The executive explained that the Sandbox of Colombia began in September 2020 and culminated with the application on December 21. At that time, he said that buda.com began a process of socialization with financial institutions in Colombia. The country manager recalled that to make this idea possible they managed to open the doors of Banco de Bogotá, since one of the requirements is that a cryptocurrency platform must be supervised by a local financial institution .

Subsequently, a meeting was called in which the Financial Superintendence of Colombia, representatives of the Presidency of the Republic, the Central Bank and the Ministry of Finance, among other organizations, participated to evaluate the applications of this pilot format.

Beltrán recalled that, on that occasion, 14 initiatives were presented and of that group 9 of them were approved. Then, they began to prepare this alliance that was finalized in March 2021. This alliance covered four main aspects: the first is to know how the bank transactions or the operations of collection and dispersal of funds in local currency were going to be carried out, product of the sale of cryptocurrencies .

On that occasion, he pointed out that the second point to be discussed was how a risk management system for money laundering and terrorist financing was managed. Third, how cybersecurity is managed and how information security is managed on platforms with a technological base in compliance with standards such as ISO 27001 , among other aspects. Fourth, he mentioned how consumer rights are protected.

He said that these four vertical axes allowed an initial presentation of this alliance and began a preparation process. This initiative began with the validation of the supervisory entity of the cryptocurrency platform that took into consideration different aspects, for example, legal, operational compliance risk and cybersecurity, how exchange platforms handle this type of identification, control and monitoring of operations, what tools are implemented and what was the communication strategy of both parties to reach this pilot project, he said.

This pilot project, whose test lasts one year, on the recommendation of the Financial Superintendency, should not have more than 5,000 users, it cannot make larger transactions 50 million pesos for ordinary deposits and for electronic deposits of no more than 7 million pesos. It is expected that next July the Superintendency will give us the endorsement to be able to operate in this test environment.

Alejandro Berltrán, country buda.com manager in Colombia.

Beltrán: Colombia’s Sandbox seeks to evaluate cryptocurrency cash operations. Source: Youtube.

Sandbox in Peru: for all financial companies

In Peru a Regulatory Sandbox will be applied. For this project, the experience of Colombia in this matter was taken as a reference. Subject that was expanded by Abel de Revoredo, who explained that this initiative in Peru was presented for interested parties to comment. The deadline to do them expires on June 24, 2021 .

According to Revoredo, a work team has been formed in the FinTech Association where the observations are being compiled and then the comments of all those involved.

The lawyer specified that the main comment that has jumped in the conversations is that the draft of regulations It is intended to be applied to companies in the financial system , there is no longer talk of FinTechs in particular and it seems that the Superintendency of Banks (SBS) is thinking of a different Sandbox model. It does not even talk about the alliances that Alejandro Beltrán commented and there is no possibility that a FinTech is accompanied by a bank, as in the case of Colombia, but it establishes that its scope is for the entities of the financial system in which they are going to carry out disruptive activities or novel activities.

He commented on the subject of the tests carried out in Colombia, which are similar to those carried out in Peru. Once is established, the model to be tested can have a maximum duration of 12 months . You have to set a maximum number of participants for the test. Processes for the start and end of the test must be established, and the legal or regulatory procedures established by the SBS must be complied with during the process.

He clarified that the fact The fact that they authorize the test does not guarantee that the innovative model will continue to function , it does not guarantee that a standard will come out that makes the current regulations more flexible so that this model is established and remains in the hands of the Superintendency of Banks the permanent realization of the activity.

My great concern is because it is thought of entities of the financial system and, second, because It seems to me that some provisions are lacking that give the SBS a bit of flexibility to move as it finds or becomes familiar with each of the disruptive models that are going to be presented. Those are the two main comments.

Abel de Revoredo, lawyer and ambassador of the People of Peru Association.

He added that the Sandbox of Peru can be seen as an opportunity not only to integrate the supervisor but also to private sector companies that have expertise in this business model that ultimately translates into regulation or not.

Spain’s Sandbox presented a solution to monitor the cryptocurrency market

Like Colombia, Spain also has its sandbox for financial companies. In this framework, several developments were presented. One of them, which was unveiled last February, is a platform for the regulatory management of cryptocurrencies such as bitcoin (BTC) . It was presented by the company Common MS, a provider of software solutions for the management of the banking environment.

As reported by CriptoNoticias on that occasion, this initiative “will be based on an operations model that will be applied on platforms with blockchains «.

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