The Latin American nation of Colombia has declared Bitcoin illegal. By doing so, the country has included itself into a list of handful nations that have taken such a step. The news was announced few days before the new year by the country’s regulatory agency — Superintendency of Corporations (Superintendencia de Sociedades).
The announcement was made by the head of Superintendency, Reyes Villamizar. According to reports, the action was taken to check the increasing growth of so-called investment clubs which are mostly Ponzi schemes. Most of these investment clubs encourage people to invest cryptocurrency by promising huge returns. In order to benefit from them, the investors will be required to bring more investors on board. Few such schemes in Colombia promise to offer as much as 100 percent return on investments, which is a tell-tale sign of fraud in the making.
The Superintendency, like any other regulatory authority across the world, has reiterated that the only valid medium of transaction in the country is the currency issued by Banco de la Republica. The news of Bitcoin ban in Colombia comes at the time when the cryptocurrency is trading at over $950. The ban is expected to have a huge impact on those who are already invested in Bitcoin.
By deeming the digital currency illegal, Colombia has also put the country’s economy at risk as cryptocurrency adoption continues to rise across the world. Latin American nations are already faced with plenty of economic challenges. The high cost of banking combined with hefty money transfer fees makes it impractical for many to rely on conventional banking and financial systems.
While the increasing number of cryptocurrency related Ponzi schemes is a thing of concern, the government should try to tackle it by targeting the promoters of such scams. Instead, Colombia is targeting the whole cryptocurrency community in the region by issuing a blanket ban.
In the long run, the ban may lead to deterioration of the country’s economy. Venezuela and other countries in the continent stand as an example for the use of Bitcoin and how it can keep the country afloat in the middle of an economic crisis.
Ref: PanamPost | Image: NewsBTC