Cryptocurrency adoption is growing in the lower part of Bogota. The Colombian tax office DIAN (Dirección de Impuestos y Aduanas Nacionales de Colombia) is starting to catch up. He is looking for “special measures” to break the whip of crypto tax evaders.
In a statement released on Friday, DIAN said they will try to better regulate the crypto space and work towards a more “honest” Colombia. The statement acknowledges that the use of bitcoin (BTC) and cryptocurrencies is growing worldwide:
“Currently, transactions using cryptocurrencies are a reality all over the world, and due to the boom in the use of so-called virtual currencies or cryptocurrencies, DIAN has introduced measures aimed at controlling the taxpayers with whom they conduct transactions.”
DIAN actually wants to create a structure that will conduct tax audits for “forgotten” or “inaccurate” taxpayers. This includes Colombian citizens who do not record cryptocurrency income or those who record inaccurate cryptocurrency activities.
This is not surprising as Colombia is becoming an increasingly active country in the use of bitcoin and cryptocurrencies. According to Usefultulips.org, the worldwide online bitcoin trading service, Colombia consistently ranks as the second most active bitcoin trading country in Latin America.
Meanwhile, a search on Coinmap shows hundreds of merchants and ATMs across the country for Bitcoin services. In fact, there are 687 bitcoin-supporting retailers in Colombia, according to the Venezuelan newspaper El Nacional.
While hardline libertarians may turn a blind eye to attempts by the tax authorities to regulate the space, the move could actually encourage more widespread use of cryptocurrencies. Recent news, in addition to DIAN’s approach to regulation, indicates that Colombian institutions are indeed moving towards crypto.
Colombian law currently prohibits its financial institutions from defending, investing, intermediating or managing cryptocurrency transactions. However, Colombian citizens can invest, and some old financial institutions are paving the way for more widespread use of cryptocurrencies in the country known as “Gateway to South America.”
Last March, Banco de Bogotá, one of the oldest banks in Colombia, surprised existing companies and announced that it would be exploring crypto-related services as part of a regulatory sandbox project. Winklevoss’ twin trading company Gemini has since partnered with rival bank Bancolombia to enable customers to trade four cryptocurrencies: Bitcoin, Ether (ETH), Litecoin (LTC) and Bitcoin Cash (BCH).
The Colombian government appears to be endorsing cryptocurrencies when it launched a game in September 2021 that teaches young people how to invest in the stock market and cryptocurrencies.
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But before jumping to the conclusion that Colombia could be the next Latin American country to use bitcoin as legal tender, you need to understand that DIAN’s efforts are simply an attempt to fight tax evasion.
The country must increase the number of users and volume of trade and attract more ministers before such a move can take place.