Cryptocurrency Regulations in Uruguay Prior to 2023

As of 2024, Uruguay’s approach to cryptocurrency regulation reflects a cautious yet progressive stance. Despite not having specific regulations or legislation for digital currencies, Uruguay’s legal status of cryptocurrency remains a point of debate. The country’s safety rank in cryptocurrency-related activities stands at a modest 2.2 out of 10, positioning it 154th out of 249 countries globally in terms of cryptocurrency safety​​.

The Central Bank of Uruguay (BCU) plays a pivotal role in shaping the country’s cryptocurrency landscape. Without formal regulations in place, the BCU has embarked on pilot projects aimed at creating risk-based regulations. These initiatives focus on harnessing the opportunities presented by new systems and the digital revolution. Efforts include removing entry barriers, reducing transaction costs, and enhancing efficiency. These measures reflect Uruguay’s commitment to embracing ICTs and leveraging its competitive talent and specific incentives for technology development. In 2020, Uruguay’s hosting of the “Blockchain Summit Global” underscored its ambition to become a business technology hub​​.

In a significant move, Uruguay’s executive branch submitted a bill to Congress, designed to empower the BCU with legal authority to regulate virtual assets. This bill proposes creating a new category for virtual asset service providers and amends the BCU’s organic charter. It also seeks to place virtual asset service providers under the Financial Services Superintendence’s supervision. Additionally, the bill aims to redefine crypto assets as book-entry securities, which must be issued by registered entities complying with specific legal and regulatory requirements. This proposed legislation represents Uruguay’s first attempt to address the regulatory grey areas surrounding cryptocurrency exchanges and service providers​​​​.

The bill’s introduction aligns with the Central Bank’s broader strategy to become the main crypto watchdog in Uruguay. It categorizes companies facilitating virtual asset exchange and related financial services within a new regulatory framework. Moreover, the bill includes provisions for “virtual asset issuers,” defining them as platforms issuing or requesting admission of regulated virtual assets on trading platforms​​.

Despite these efforts, the cryptocurrency landscape in Uruguay remains largely unregulated. The Central Bank emphasizes that crypto assets are not legal tender like the Uruguayan peso and cautions that existing protections for regular investors do not extend to those involved in cryptocurrency trading or investment. Meanwhile, a draft bill proposed by Senator Juan Satori in August suggests recognizing crypto assets as legally acceptable in business transactions. This proposal, if passed, would mark a significant shift in Uruguay’s legal framework concerning digital currencies​​​​.

In summary, Uruguay’s cryptocurrency legislation in 2024 is characterized by cautious progressivism. The Central Bank’s pilot projects and the executive branch’s legislative proposal reflect a nuanced approach to embracing digital currencies while safeguarding the financial system and its participants. As these developments unfold, Uruguay positions itself as a country open to digital innovation, balanced with a prudent regulatory perspective.

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