Should cryptocurrency trading be regulated in Peru?

Julio Velarde, president of the Central Reserve Bank of Peru (BCR) said Friday that they have not considered regulating cryptocurrencies for the time being. “We don't plan to be either the first or second central bank to regulate cryptocurrencies,” he said. He said that the concern is that currencies must be stable. “It seems to us that the stability of the currency will be an increasingly important issue. The thing about crypto assets is that volatility can go either way, up or down.”

Álvaro Castro Lora, founding director of SUMARA Hub Legal, commented that Velarde's comment is due to the fact that a bill called the Framework Law for the Trading of Crypto Assets is in the pipeline, which was presented a few months ago by Congressman José Elías Ávalos (Podemos Peru). In this regard, the BCR and the Superintendency of Banking and Insurance have already expressed an unfavourable opinion.

“What the BCR says is that cryptocurrencies are not financial assets for which they have competition, so it is not appropriate to pronounce. On the other hand, cryptocurrencies are not environmentally friendly and also lend themselves to financing illegal activities. What SBS said is that they only have jurisdiction over companies that have a license to operate under the banking law, and this corresponds to private autonomy,” says Castro.

Added to this, a few weeks ago, the head of the BCR said that they are working on a digital currency of their own. What is known as Central Bank Digital Currency (CBDC), a project will come to light in a few years, but nothing about crypto.

Considering that Peru is a market that has a significant number of cryptocurrency customers, is it necessary to regulate this business in the country? For the specialist, what is urgent is regulatory recognition. “To the extent that it is not a restricted activity, nor does it require a special license or there is a specific regulator, at least the framework for operating freely should be established. Because in Peru, what is not forbidden is allowed,” he said.

He adds that in the absence of express regulation, platforms could operate, but they need a bank account in Peru, because transactions with customers are through bank accounts. What's going on? Banks do not open accounts or even close accounts on the grounds that there is a risk of money laundering. They tell them that they should comply with the laundering regulations, but this does not recognize crypto businesses as an obligated subject and is not on the list of the Financial Intelligence Unit (FIU).

“Regulatory recognition is urgent because what happens is that there are Peruvians acquiring crypto on platforms outside Peru. And only those who have credit cards buy, but those who don't have a card can't buy,” says Castro.

On the other hand, it indicates a more debatable issue regarding what happens to consumer protection concerns. If a platform is in Peru, even if it does not have special regulations, it is subject to the rules of Indecopi. This applies transversally to any company that provides goods and services to consumers in Peru. The point is that standards are not intended for a precise digital sphere.

IS IT WELL REGULATED OR NOT REGULATED

For the expert, this is a topic that needs to be addressed, however there is a danger that is the fact of regulating poorly. “We have to make sure that the business model has been understood. Because the lack of regulation could mean that it does not generate a great development of the ecosystem, but poorly executed regulation will kill it,” he points out.

He argues that a regulation should be proportionate to the status of the current industry. It should be very light and focus on understanding the business. A regulation with these characteristics, for example, is what has allowed factoring to grow in Peru. “Otherwise the local industry will drown and Peruvians will continue to buy crypto, but outside,” Castro says.

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