Uruguay’s recent law regulating cryptocurrency posits it as a leader in crypto governance within Latin America. The Central Bank will oversee virtual assets, while neighbouring countries, notably Argentina and Brazil, have already embraced crypto frameworks. Despite challenges in adoption, experts believe Uruguay’s stability and new regulations can foster growth and legitimacy for cryptocurrencies in the region.
In October, President Luis Lacalle Pou of Uruguay enacted a bill that regulates cryptocurrency in the country, recognising these digital currencies as virtual assets. This legislation, proposed over two years ago, empowers the Uruguayan Central Bank to oversee the sector, specifically managing virtual assets service providers (VASPs), who will require permits to operate legally.
The Central Bank is tasked with monitoring VASPs while the Superintendence of Financial Services (SSF) will identify exchanges, wallets, and miners to be classified as VASPs. This regulatory framework positions Uruguay among the few Latin American nations with established crypto regulations, following advanced measures from countries like El Salvador, Argentina, and Venezuela.
Coincidentally, ten other jurisdictions in Latin America and the Caribbean have created frameworks for cryptocurrency use, including Brazil and Argentina, with Argentina leading in receiving crypto value. Between July 2023 and June 2024, Argentina experienced crypto inflows worth approximately $91.1 billion, closely followed by Brazil’s $90.3 billion.
In Mexico, a fintech regulatory framework since 2018 classifies cryptocurrencies as virtual assets, allowing them to be used for transactions if merchants accept them. Conversely, El Salvador has officially adopted Bitcoin as legal tender; however, practical acceptance remains problematic across local establishments.
Some countries remain resistant to crypto adoption, particularly Honduras, which has raised alarms over risks associated with unregulated digital currencies. The Guatemalan government similarly urges caution, and while cryptocurrencies are technically permitted, they lack a formal legislative recognition that would afford them legal payment status.
Uruguay stands out for its political and economic stability in Latin America, rated as the most democratic nation within the region. The Economist’s 2023 Democracy Index awarded Uruguay a score of 8.66, ranking it 14th globally, with a GDP per capita of $22,565, far exceeding figures from countries like Venezuela.
Uruguay’s regulatory advancements may serve as a benchmark for its neighbours, promoting legitimacy and investor confidence in cryptocurrencies. Emiliano Zapata, a blockchain developer, pointed out that while crypto usage is not yet widespread in Uruguay, the new regulation could enhance business development, particularly as the country is viewed favourably amidst regional instability.
Zapata noted that this stability, despite conservative tendencies, is conducive to fostering commercial activities. He acknowledged the regulatory framework will introduce more bureaucracy, yet posited it is essential for ensuring the security and expansion of both local and international ventures.
Martín Benítez Aramendía, Vice President of the Uruguayan Chamber of Fintech, echoed these sentiments, suggesting Uruguay’s environment for business and economic stability establishes natural interest in cryptocurrency transactions. He highlighted emerging patterns of crypto exchanges influenced by economic conditions in Argentina.
In many Latin American territories, cryptocurrencies primarily function as investment vehicles, but Argentina uses them more extensively in day-to-day transactions, providing a solution unattainable in traditional financial systems. The new law in Uruguay is seen positively, reflecting ongoing concerns about its passage, while the Fintech Chamber anticipates that swift regulatory clarifications will allow Uruguay to maintain its competitive edge in crypto adoption across the region.
