STO regulation and law in Colombia

1. Are Security Tokens securities in this jurisdiction?

The Central Bank of Colombia stated through public declaration of January 2017, that cryptocurrency is not considered as a legal or adopted currency in Colombia.

Even though this declaration is a year old, the Central Bank's position has not changed. Nevertheless, the Colombian Congress is currently reviewing a draft bill which regulates the use of cryptocurrency in Colombia (Bill N. 28 / 2018), which demonstrates the interest to regulate this subject and the eventual use of this currency in our country, but until today, neither the Central Bank, the government or the Finance Superintendence acknowledges cryptocurrency to be a legal currency in Colombia.

2. Under what conditions is a prospectus necessary under this jurisdiction?

A prospectus is necessary under Colombian jurisdiction every time an entity issues bonds that are to be marketed to the public. The prospectus must contain the following information: (i) identification of the issuing company, (ii) amount of the loan, (iii) nominal value for each bond, (iv) nominal yield and cash to be paid, determined subject to legal provisions, (v) the law of circulation which the bond adheres to, amongst others contained in the Decree N. 633 / 1993.

Please consider that this does not apply to cryptocurrency because it is not regulated in Colombia.

3. Do the prospectus duties of this jurisdiction apply to STOs?

As of now, prospectus duties do not apply to STOs because they are not permitted in Colombia. However, if STOs are approved in our jurisdiction, prospectus duties would most likely apply to them or it shall be necessary to generate prospectus conditions to this new and specific currency. 

Currently, it is not possible to establish or estimate the time it would take to have a prospectus or an STO approved. An accurate practice will only emerge with the approval of STO prospectuses in the future.

5. Do KYC/AML requirements apply?

No, as currently STOs are not allowed in Colombia. 

6. Can rights be securitized or otherwise represented by way of tokens under this jurisdiction?

No, as previously sated, the central Bank of Colombia does not recognize cryptocurrency as a valid currency or form of payment in Colombia.

Since STOs are not allowed in Colombia, there are no stipulated legal requirements that their issuers must comply with. There are no regulations for STOs or their issuers in Colombia. 

8. Statements from authorities and/or legislator regarding STOs

As of now, no authorities or legislators have made any statements regarding STOs specifically. However, as mentioned above, the Colombian Central Bank made a statement in January 2017 saying that cryptocurrency is not considered as a legal currency in Colombia.

Nevertheless, Congress is currently reviewing a draft bill which regulates the use of cryptocurrency in Colombian territory (Bill N. 28 / 2018). This bill is a general framework regulation regarding cryptocurrency, it does not refer to STOs specifically. Up to date Congress has not issued any decision regarding this bill.