The BCU specifies that cryptocurrencies like Bitcoin (BTC) and Ether (ETH) are virtual exchange assets, for which they would be out of regulation. The BCU mainly targets virtual asset service providers related to investing and raising capital, such as exchanges.
The Central Bank of Uruguay (BCU) recently issued a statement providing definitions and explaining how to regulate Bitcoin and other cryptocurrencies. Generally speaking, no legislation restricts their use as a payment or exchange method but as an investment asset.
The document, titled Conceptual Framework for the regulatory treatment of Virtual Assets in Uruguay, shows the results of a study by the internal Working Group. The monetary entity especially formed that team to analyze the regulation of cryptocurrencies.
According to local media, the BCU might work on a bill to legislate on this matter. In October, they analyzed the regulation of crypto assets and worked on a conceptual framework, which they recently released.
Diego Labat is the president of the government agency that regulates the monetary system in Uruguay. He stated that the document seeks to announce their intentions about crypto assets.
How the Central Bank of Uruguay Defines Virtual Assets
Cryptocurrencies are novel assets that differ from the others in the traditional financial system. For that reason, that document aims to establish everything regarding each element or actor in the ecosystem.
Therefore, it defines a virtual asset as a digital representation of value or contractual rights. It says that it is possible to store, transfer and trade them electronically through distributed ledger technology (DLT).
The statement specifies that cryptocurrencies like Bitcoin (BTC) and Ether (ETH) fall into the virtual exchange assets category. The BCU explains that they serve as a medium of exchange or investment.
They also distinguish three other types of virtual assets that exist in the ecosystem. Virtual asset securities can grant rights over property, money reimbursement, or future economic benefits. Virtual utility assets allow access to products or services such as fan tokens. Virtual stable assets reduce volatility, and reserve assets can back them.
The document also provides details on what a developer, miner, escrow service provider and user should be. It also defines exchanges and explains what brokers or advisers, issuers of virtual assets and cryptocurrency service providers should do.
The BCU Establishes a Regulatory Framework for Bitcoin in Uruguay
The BCU defines the activities of the cryptocurrency ecosystem they can regulate based on the above definitions. For example, they include virtual asset service providers related to investing and raising capital, such as exchanges.
They consider that virtual utility and exchange assets are interchangeable or usable for payment in kind. For that reason, they would exclude them from the regulatory framework, except in the case of indirect investments like stock market futures.
The conceptual framework of the BCU establishes that stable virtual assets provide the best opportunities regarding the efficiency of payment systems. Due to their increasing adoption, the monetary entity considers they have a considerable potential to acquire systemic importance. The document states that they reduce costs and improve interoperability, and their regulation can minimize associated risks.
By Alexander Salazar
