510: Cryptolombia? Digital currencies in Colombia and Latin America

Colombia Calling - The English Voice in Colombia

This week, Emily Hart is setting out into the Wild West of cryptocurrencies here in Colombia and beyond. Is cryptocurrency the future of finance in Latin America? Is it safe? Is it just another way for rich people to hide their wealth from the tax man? Or for criminals to launder income? Or could it be a way for people to take banking into their own hands, a way for all of us to take control from a global system of banking we have so little say in? To explain all of that, we have on the show today Mat Di Salvo, Colombia-based correspondent covering crypto since 2019 for Decrypt, and two experts from Global Financial Integrity, a Washington DC-based think tank focused on illicit financial flows, corruption, and money laundering. Claudia Helms is the Director of the Latin America and Caribbean Program at GFI, having worked at the Organization of American States; And formerly at the UN, Claudia Marcela Hernández works as Policy Analyst for Central America in Global Financial Integrity. By early 2020, the region had 15.8% of the total volume of bitcoins worldwide, and it has grown exponentially since then. Last year, Mexico, Brazil, and Argentina were in the top 20 for global adoption – Colombia was 32nd in the world. Venezuela was 40th. Looking at crypto in any country requires a close look at the context, unique in every case: this region is turning to digital and virtual currencies for many different reasons, using it to send remittances, invest, and save – especially important in countries that have unstable governments, high inflation, or low levels of trust in institutions. Here in Latin America, levels of poverty and informal employment might create barriers to usage, while technological and educational gaps create unique challenges for users, especially when a new digital revolution of cryptocurrencies and virtual assets arrives without adequate regulation, government oversight, or consumer awareness – particularly around scams and security. This is why GFI started https://criptoabierto.com/ - a set of resources around crypto in Latin America designed for users and policy-makers alike. Basically, regulation of cryptocurrencies in the region does not adequately match its current usage and adoption. Colombia has yet to adopt legal framework, despite a growing number of users, but there is movement around this issue and various institutions have released commentary on it, and President Gustavo Petro has expressed interest in encouraging crypto usage - and mining - in the country. Thanks to the anonymous nature of this universe, it’s difficult to get accurate data on exactly who is using crypto and what for, and though it’s certainly not only criminals using these currencies and assets, they have high potential for money laundering and channelling illicit flows of money, from stolen funds and fraud to payments for illegal goods and funding of terrorist groups. We’ll be talking about the opportunities and risks associated with cryptocurrencies, how their form and use are evolving, plus how (and why) cryptocurrencies can and should be regulated. The Colombia Briefing is also reported by Emily Hart – to get it direct to your inbox or email, you can subscribe to the Colombia Briefing via her Substack substack.com/@ehart or subscribe to the podcast’s Patreon.