The Central Bank of Ecuador is planning to prepare and issue cryptocurrency-related regulations this year. The announcement was made by Guillermo Avellan, manager of the Central Bank in an interview on January 30th. When asked about the state of the cryptocurrency regulation of the country and how it seems to be lagging as compared to other countries in the region, Avellan stated:
The Central Bank is working on a project to regulate cryptocurrencies, bearing in mind that the Monetary Code establishes that the dollar is the only legal tender in the country.
Avellan further explained that the new regulation would not make bitcoin or any cryptocurrency legal tender, as happened in El Salvador with the approval of the bitcoin law, due to the volatility associated with these assets. Instead, this piece of regulation would be directed at bringing more clarity to the status of crypto in the country.
Reasons Behind the Resolution
Apart from the aforementioned factors, another reason to issue the regulation concerning cryptocurrencies are worries the government has about the possible illegal use of these assets. Avellan stated that with regulation in place, the banks will be able to establish limits on how these tools are being leveraged. There have been cases of actors using cryptocurrencies for money laundering purposes in the country, and these regulations would be directed at curbing such instances.
While the government issued a ban on bitcoin back in 2014 and launched its own digital token called Dinero Electronico in 2017, cryptocurrency usage in the country has continued to grow. The population is largely unbanked, with 50% of people having no access to a bank account, according to Avellan’s numbers.
While he did not give specific dates for the establishment of these regulations, Avellan did offer some estimates. He declared:
We are going to work in the first quarter of 2022 so that it can be reviewed and approved between the second and third quarters of the year by the Monetary Board.