El Tiempo is reporting that Colombia is planning to ban all Bitcoin-related transactions next week. This news comes as quite a shock because the fact of the matter is Colombia is not exactly the first country that people think about when it comes to hotspots of cryptocurrency. The Finance Superintendent of Colombia has claimed that virtual currencies are not safe because they have no backing from government. He claims that Colombia already has a safe and useful currency and there’s no reason for people to use bitcoins. The El Tiempo article also quotes the Economics Director at the University of La Salle stating that Bitcoin is useful as a payment system, not as a currency.
Why Would Colombia Ban Bitcoin?
Any final say on why Colombia may want to ban Bitcoin would be nothing but speculation at this point. Having said that, there is definitely one clear reason as to why Colombia and other South American governments are not going to like cryptocurrencies. Many countries in this part of the world have restrictions on how much money their citizens can take out of the country, and Bitcoin is one of the easiest ways to avoid these restrictions. When people are only allowed to move a few thousand dollars outside of the country each year, Bitcoin could start to become a more interesting option for securing one’s finances. Economic restrictions and Bitcoin are the polar opposites of each other, so countries that have governments who want to have control over the economy will definitely face huge issues during the age of cryptocurrencies. We’ve reported on the capital controls in Argentina on CCN in the past, and this ruling from Colombia could have a ripple effect throughout the rest of South America.
What Happens Next?
Most of the facts related to Colombia’s action against Bitcoin are currently tied up in a government document that has not been released to the public. Even the Bitcoin community in Colombia is not really sure what will happen quite yet, but a member of Bitcoin Colombia has a meeting with some of the “bigwigs” inside the government next week. It is not yet known whether this meeting will be a good or a bad thing for the local Bitcoin community. We’ll be sure to update this story on Tuesday when the supposed document behind these claims is released. The Bitcoin community should be hoping that this document is more of a recommendation than an actual change in law.
Note: Special thanks to Rey Poullard on Twitter for help with this article.