Regulations are not advancing at the rate Latinos are embracing cryptocurrency.
There is a lack of government efforts to protect bitcoin users in the region.
The Latin American cryptocurrency ecosystem is seriously exposed to extortion, fraud, fraud and even project collapse, such as the one that happened recently with the FTX exchange. This was stated by Global Financial Integrity (GFI), an organization focused on investigating illicit financial flows.
A report published by GFI analyzes the financial crime threats affecting the region, just for now The cryptocurrency sector is affected by the state of FTX.
What was once the industry’s third-largest crypto-asset exchange declared bankruptcy on November 11. Its founder and CEO, Sam Bankman-Fried, was later found to have lost user funds between bets on decentralized finance (DeFi) protocols and loans.
Now the world is asking how can the funds of users of cryptocurrency services be better protected?
In the midst of hundreds of analyzes to figure out the way forward, GFI researchers have taken stock The Mosaic of Cryptocurrency Regulations in Latin America and the Caribbean.
His conclusion is that the region suffers from a lack of appropriate frameworks for organizing and supervising projects. Therefore, crimes are not prevented in the cryptocurrency sector.
In fact, the map of regulatory frameworks by region by country stands out quite clearly Lack of government efforts to protect bitcoin users (BTC) and other crypto assets. Only 6 out of the 32 countries analyzed have enacted laws to regulate the cryptocurrency industry, as stated in the GFI report.
The analysis focuses specifically on the countries in the region with the highest adoption of bitcoin and other cryptocurrencies. This is the case of Argentina, Brazil, Colombia, El Salvador and Mexico.
Cryptocurrency regulation in Latin America and the Caribbean is not adequately matching the increase in adoption that is taking place. The governments of the region must realize that crypto assets cannot be eliminated, on the contrary, they must be considered as new financial products that contain risks and must be regulated to protect users and investors.
Global Financial Integrity: Regulating Cryptocurrencies in Latin America.
The document adds that even without strong regulation, The cryptocurrency ecosystem has developed satisfactorily for the majority of citizens region. Above all, in countries with great financial instability, as is the case in Argentina.
El Salvador, Brazil, Colombia and Mexico are highlighted
In Latin America where the cryptocurrency sector is poorly regulated, the GFI report highlights countries like El Salvador, Colombia, Brazil and Mexicoas they are legislated to serve the ecosystem.
In El Salvador, for example, bitcoin has been declared legal tender and there is a whole regulatory framework in place to promote cryptocurrency adoption.
In Brazil, a law is currently being debated in Congress, while Colombia has various initiatives under discussion. While in Mexico it only has Fintech law.
However, these efforts are not enough, as cryptocurrency users in these countries, They are still exposed to financial risks such as scams and scamsadds the report.
In the view of the researchers, “Effective regulations can protect users and empower investors, which will contribute to the development of a country.”
In this sense, the document includes a section of recommendations that governments are urged to take Consider the cryptocurrency industry as part of the financial system of their states and legislation to regulate the ecosystem.
In any case, not everyone agrees with stricter regulation of the cryptocurrency ecosystem, because, for example, in the United States, many of those charged with overseeing the industry have been implicated in the FTX case, as pointed out by technology consultant Edward Snowden.