Besides the curious case of Venezuela, the rest of us living in other parts of the blue planet don’t get enough information about what’s going on with the cryptocurrency scene in countries lying south of the USA.
However, there are more than a few large markets in that part of the world that deserve to be covered by our series of articles about ICO regulations.
Mexico is a huge country with almost 130 million people, according to the World Bank, and, as such, presents a significant opportunity for crowdfunding campaigns in the country.
ICOs in Mexico are subjected to the country’s FinTech act, whose wireframe was approved by the lower house of Congress in early March 2018, and presents a cornerstone for the “secondary laws”, which will define the complete country’s stance towards crypto assets and ICOs.
ICOs, as such, are not illegal in the country of tequila and guacamole. Still, companies conducting Initial Coin Offerings should be careful not to violate Mexico’s Securities and Exchange Act. In the case their cryptocurrency is defined as a security (presents a share in the ownership of the company, brings dividends to owners, etc.), they should register their fundraiser with the appropriate government’s office.
ICOs are allowed in Brasil. The country’s Comissão de Valores Mobiliários (CVM), which is the equivalent of the Securities and Exchange Commission, keeps a close eye on the newly established market.
Certain cryptocurrencies, depending on their nature, may be subjected to Brasil’s Securities and Exchanges Act, and then companies conducting such crowd sales would be required to register their offering.
Despite the fact, CVM informs that no ICO was legally registered nor approved by the Commision.
Furthermore, CVM also cautions investors to consider specific risks when investing:
- Fraud and Ponzi schemes
- Lack of suitability rules
- Money laundering and tax evasion
- Service providers noncompliant with regulation
- Promotional advertising material that does not comply with CVM rules and regulations
- Operational risks in trading environments not monitored by the CVM
- Cybernetic risks associated with management and custody of virtual assets
- The operational risk related to virtual assets and their respective systems
- Volatility associated with virtual assets
- Legal and operational challenges in cases of litigation with issuers, considering the virtual and cross-border nature of the operations with virtual assets
In January 2018, CVM declared that cryptocurrencies are not considered to be financial assets.
Similarly to the situation in Brasil, Argentina’s Comisión Nacional de Valores (The National Securities Market Commission) stated that ICOs aren’t regulated by any law of the country.
Nevertheless, if certain cryptocurrency offered through such crowdfunding campaign has some characteristics of a security, that ICO falls under the country’s Commercial Code of the Nation and Article 2 of the Capital Market Law.
Those who fail to comply could face administrative and criminal liabilities.
ICOs are allowed in Colombia, with a slight warning from the country’s Superintendencia Financiera de Colombia (Financial Superintendence of Colombia) that investors are not in any way protected by any government’s body if they decide to fund one such project.
Cryptocurrencies aren’t legally considered to be currencies and don’t represent a legal tender.
Bolivia and Ecuador
Cryptocurrencies and ICOs are entirely banned in these two countries.
Bolivian government issued a ban as early as 2014, reminding citizens that it is strictly forbidden to use any currency which is not approved and regulated by the country’s laws. Moreover, 60 individuals were arrested for conducting a workshop connected to crypto.
Meanwhile, Ecuador devised a specific regulatory framework along with the country’s digital currency completely backed and controlled by Banco Central del Ecuador. That set of regulations bans all other decentralised forms of currencies, such as Bitcoin.
Consequently, ICOs are also prohibited under the Organic Monetary and Financial Organic Code.
Venezuela has the most curious case of all countries on the continent south of the US.
President Nicolás Maduro, to deal with the economic crisis that’s been shaking the country, issued the first government-backed ICO of the national cryptocurrency, Petro Moneda, which is backed by country’s natural resources, such as gold, oil, and gas. Just on its first day of launch, the oil-backed crypto raised $735 million.
Considering other such crowdfunding campaigns, the country has no specific legal framework which regulates the crypto space.
For a recap of the countries’ regulations, check out the table below.