Quick Answer
Yes, cryptocurrency is legal but unregulated and not legal tender.
- It is considered an intangible asset, not official currency or money.
- Service providers must follow AML rules, but banking support is restricted.
Legal Status of Crypto in Colombia
Cryptocurrency in Colombia operates within a legal gray area, as it is neither explicitly illegal nor fully regulated. This ambiguity arises because no specific laws govern crypto-assets, though authorities like the Banco de la República and the Financial Superintendence of Colombia (SFC) have clarified they are not legal tender, money, or securities. While a comprehensive regulatory framework is still developing, existing rules from bodies like the tax authority (DIAN) and the Financial Information and Analysis Unit (UIAF) mean crypto is treated as an intangible asset for tax purposes and subject to anti-money laundering compliance.
Current Regulations
While Colombia lacks a specific, comprehensive law for cryptocurrencies, a foundational framework exists through various official provisions. The Financial Information and Analysis Unit (UIAF) requires Virtual Asset Service Providers (VASPs) to submit suspicious transaction reports, and the Superintendency of Companies mandates anti-money laundering systems for businesses involved with virtual assets. Furthermore, the Financial Superintendence of Colombia (SFC) maintains a restrictive stance, having issued circulars that prohibit supervised financial institutions from holding, investing in, or facilitating crypto transactions.
Regulatory Authorities
Several key governmental bodies shape the regulatory landscape for crypto-assets in Colombia, each with distinct oversight functions.
- Financial Superintendence of Colombia (SFC): The SFC supervises financial entities and has prohibited them from holding, investing in, or intermediating with digital currencies. It also considers cryptocurrencies to be intangible assets and has worked on crypto-related pilots to explore future regulatory frameworks.
- Banco de la República (Central Bank of Colombia): As the country's central bank, it has declared that cryptocurrencies are not legal tender, money, or a foreign currency under Colombian law. Its pronouncements focus on monetary policy and warn about the risks of crypto-assets, clarifying they are not backed by the state.
- Financial Information and Analysis Unit (UIAF): The UIAF is Colombia's primary anti-money laundering (AML) and counter-terrorism financing (CTF) watchdog. It requires Virtual Asset Service Providers (VASPs) to report suspicious transactions and submit regular reports on their clients and activities to prevent financial crimes.
- Superintendency of Companies (Superintendencia de Sociedades): This body supervises corporate activities and requires businesses dealing with virtual assets to implement robust anti-money laundering systems. It has also issued guidance on how crypto-assets can be contributed to a corporation's capital, treating them as intangible assets or inventory.
- National Tax and Customs Directorate (DIAN): DIAN is the national tax authority and has established that crypto-assets are intangible assets for tax purposes. It requires Colombian residents to declare their crypto holdings on annual income tax returns and has issued opinions clarifying tax obligations for crypto transactions.
Historical Context
Colombia's crypto regulation journey began in 2014 when the SFC prohibited financial institutions from servicing crypto companies. This restrictive stance intensified in 2018 with official warnings that led to bank account closures, forcing some exchanges to cease operations. A key policy shift occurred as tax authorities (DIAN) began recognizing crypto as intangible assets. From 2021 to 2023, a regulatory sandbox allowed limited bank-crypto experimentation, but ended without new rules. More recently, a 2024 bill aims to formally regulate service providers, signaling a move from a restrictive, uncoordinated approach toward providing legal certainty and consumer protection.
Compliance Requirements for Businesses in Colombia
Businesses must adhere to a strict set of compliance rules designed to combat money laundering and terrorist financing. The core requirements are outlined in government guidance and enforced by several regulatory bodies, including the Financial Information and Analysis Unit (UIAF).
- AML Checks: Companies are required to perform comprehensive Anti-Money Laundering (AML) checks. This involves conducting business-wide risk assessments, establishing internal controls, reporting suspicious transactions to the UIAF, and maintaining detailed records of all transactions and due diligence efforts.
- KYC Requirements: A critical component of AML is the Know Your Customer (KYC) protocol. Entities must verify their customers' identities by collecting information like their name, address, and the origin of their funds. For high-risk clients, such as Politically Exposed Persons (PEPs), Enhanced Due Diligence (EDD) is mandatory, requiring deeper investigation into the customer's source of wealth.
- Other Mandatory Procedures: Beyond customer-facing checks, companies must implement other key procedures. These include providing regular employee training on AML regulations, conducting independent audits to review compliance program effectiveness, and continuously screening clients against national and international restrictive lists.
- Government Guidance: Compliance obligations are defined by government guidance issued through various laws, decrees, and resolutions. The UIAF provides best practices and analyzes reports, while the Financial Superintendence of Colombia issues specific directives, such as Resolution 0555 of 2019, which details requirements for risk assessments and customer due diligence. Key legislation also includes Law 1121 of 2006, which establishes the country's counter-terrorism financing regime.
Why this matters for Cross-Border Payments
The complex regulatory landscape in Colombia creates significant hurdles for businesses using crypto for cross-border payments. The prohibition on financial institutions servicing crypto companies makes converting digital assets to and from Colombian pesos extremely difficult, creating a major bottleneck for international settlement. Furthermore, the stringent AML/KYC compliance obligations, combined with the overarching legal ambiguity, introduce operational burdens and investment risks that can deter companies from leveraging crypto for payments into and out of the country.
How Lightspark Enables Compliant Crypto-Native Payments
Lightspark provides infrastructure for instant, global payments through its “Money Grid” network. Its offerings include Lightspark Connect, which gives crypto-native companies direct access to the Bitcoin Lightning Network by managing complex infrastructure like liquidity and routing. For regulated institutions, Grid Switch enables cross-border transfers using domestic real-time payment systems, avoiding the need to directly handle digital assets.
This model addresses key bottlenecks. Grid Switch allows financial entities to bypass prohibitions on holding crypto by settling transactions via local rails. For businesses using either product, Lightspark facilitates adherence to AML/KYC rules by providing tools like audit-ready reporting and built-in compliance features. This helps regulated institutions leverage modern payment technology while operating within their existing compliance frameworks, easing the operational burden of international settlement.
Learn more about how Lightspark’s platform can streamline your cross-border payments.
Notice: This article is provided for informational purposes only and does not constitute legal advice.
Sources
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- “Colombian lawmakers push for crypto regulations.” Digital Watch Observatory, DiploFoundation, 3 Mar. 2025, dig.watch/updates/colombian-lawmakers-push-for-crypto-regulations.
- CMS Legal. “CMS Expert Guide to Crypto Regulation in Colombia.” CMS Law, 21 Nov. 2024, cms.law/en/int/expert-guides/cms-expert-guide-to-crypto-regulation/colombia.
- CMS Legal. “Crypto Tax Legislation & Law in Colombia.” CMS Law, 18 Dec. 2023, cms.law/en/int/expert-guides/cms-expert-guide-on-taxation-of-crypto-assets/colombia.
- Forvis Mazars - Colombia. “Colombia takes firm steps toward cryptocurrency regulation.” Forvis Mazars - Colombia, 2025, www.forvismazars.com/co/en/who-we-are/news-publications-and-media/our-publications/colombia-takes-firm-steps-toward-cryptocurrency-regulation.
- Freeman Law. “Colombia & Cryptocurrency | Blockchain & Cryptocurrency Laws & Regulations.” Freeman Law, 2022, freemanlaw.com/cryptocurrency/colombia/.
