The Central Bank of Ecuador is planning to issue cryptocurrency-specific regulations later this year. According to statements from Guillermo Avellan, the Central Bank of Ecuador manager, this will bring more clarity to the cryptocurrency industry in the country and contribute to preventing crimes such as money laundering. More and more central banks and financial regulators around the world are actively working on cryptocurrency regulations. Earlier, India announced a 30% tax on crypto earnings this week.
New regulation would not make bitcoin or any cryptocurrency legal tender in Ecuador.
When asked about the state of the cryptocurrency regulation in 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.
The central bank wants to minimize the illegal use of cryptocurrencies.
One of the main reasons to issue the regulation concerning cryptocurrencies is the government’s worries about the possible illegal use of these assets. Avellan stated that with proper regulation in place, the central banks would 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.