Regulating the cryptosphere

Uruguay moves to regulate cryptocurrencies.

Uruguay woke up late to the cryptocurrency frenzy, but Montevideo is now starting to take the opportunities provided by digital currencies seriously. The central bank recently announced that it will present a regulatory framework to be approved by congress later this year. This is welcome news given that there has been a sharp increase in the number of Uruguayans registering on cryptocurrency platforms. Uruguay is also seeing investment from Latin American bitcoin marketplaces including Ripio which recently announced the opening a new office in the capital along with a USD 3 million investment.

A university professor specialising in cryptocurrency at the Universidad Católica de Uruguay explained, “Despite a certain degree of cautiousness, the government is clearly in favour of regulating cryptocurrency to boost investments. The ruling party senator and billionaire Juan Sartori brought forward a law to allow crypto transaction usage in August 2021 which is yet to be passed.”

“Despite a certain degree of cautiousness, the government is clearly in favour of regulating cryptocurrency to boost investments.”

Professor, cryptocurrency specialist, Universidad Católica de Uruguay

Our sources say that president Lacalle Pou is very much in favour of promoting Uruguay as a crypto hub for business. Sartori was clearly appealing to the electorate when he said that the introduction of crypto would create new jobs and attract new businesses. Indeed, there is a political agenda from the ruling Partido Nacional, which transcends the executive and is manifested through its legislative arm.

Lacalle Pou himself championed the initiative when he met with the CEO of Binance – the world’s largest cryptocurrency exchange – and encouraged the company to open an office in the country. Binance CEO Changpeng Zhao also travelled to Argentina and El Salvador, showing that there’s an interest in investment in Uruguay underpinning the need to have clarity in terms of regulatory frameworks.

The Montevideo-based head of research at an NFT marketplace said, “Despite initially slow progress, there are now some very interesting crypto initiatives emerging from the government. Last January, the administration funded an initiative in collaboration with URUBit – a blockchain e-wallet and InBierto – a crypto exchange – to install a bitcoin cash machine in Punta del Este. The initiative was a massive success, with press reports claiming that, in its first operational hours, there were thousands of transactions.”

“Despite initially slow progress, there are now some very interesting crypto initiatives emerging from the government.”

Head of Research, NFT marketplace, Uruguay

The Punta del Este project is encouraging. URUBit and InBierto were effective suppliers of software which in turn enabled the initiative to run smoothly in the middle of the summer and in a tourist hub filled with wealthy foreigners and casinos. Perfect timing you could say. It was so successful that the government is planning to open new ones throughout the country. There are approximately 50,000 cryptocurrency buyers in the country, so there’s room to expand the cash machine business.

“Frankly, it is about time the country established a crypto regulatory framework. Uruguay prides itself on being a financial hub in the heart of South America but it is lagging in terms of crypto and in the current global financial scenario it means that the country is missing out on investment opportunities which could be key to reactivate the economy after the economic damage wrought by Covid,” added the research head.

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