Uruguay’s executive branch proposes crypto regulation: El Observador

Quick Take

  • Uruguay’s executive branch has proposed a bill that, if passed in its current form, would put the country’s central bank in charge of regulating digital assets.
  • The proposed regulation would also make changes to the country’s securities law to include digital assets as book-entry securities.
  • The bill would need full congressional approval before it could become law.

Uruguay’s executive branch has proposed a bill that would allow the country's central bank to legally oversee virtual assets, local newspaper El Observador reported on September 8. 

The bill, proposed to Uruguay’s parliament for consideration, suggests putting virtual asset service providers into a “new category” of businesses, the newspaper said. These businesses would ultimately answer to the Superintendent of Financial Services (SSF), which is part of Uruguay’s central bank. 

These virtual asset service providers, known as PSAVs for their acronym in Spanish, are defined as entities that professionally offer virtual asset services to third parties on a regular basis. Such activities include the custody and exchange of virtual assets among one another or to fiat currency.

The bill would require “all entities that operate with virtual assets” in Uruguay to be subject to global anti-money laundering standards, no matter whether they are part of the country’s financial system. El Observador explains that the bill would also update Uruguay's securities market law to put crypto assets under the definition of “book-entry securities.”

So far, it is unclear how the bill might move through Uruguay’s bicameral General Assembly. If introduced, the proposal would have to pass through the country's Senate and Chamber of Deputies with or without modifications before the executive branch could consider whether to make it law.

According to the text of the bill, Uruguay’s central bank defines virtual assets as a “virtual representation of value or contractual rights that can be stored, transferred and negotiated electronically through distributed ledger technology (DLT) or similar technologies.” Blockchains fall within the wider DLT category, the text clarified. 

The bill then goes on to describe different classifications of virtual assets, with categories including virtual asset securities, virtual assets of utility, “stable” virtual assets such as stablecoins and central bank virtual currencies (CBDCs), and virtual assets of exchange such as bitcoin and ether. 

Uruguay was one of the first countries to explore a central bank virtual currency (CBDC) pilot project back in 2017, but so far has not passed any crypto-specific regulations. The conversation around doing so picked up in August 2021 when senator Juan Sartori proposed a bill that would legalize virtual assets, but it has not become law. 

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