Traditional financial institutions (banks) in Colombia are going to be forming a new partnership with some of the biggest crypto exchanges in the country to develop a crypto asset transaction pilot scheme.
According to Semana, the pilot scheme will see crypto exchanges and banks test how financial institutions can make use of crypto assets to perform transactions. This test would also be considering if these assets can be used to increase transaction speeds and also improve the efficiency of the system.
A top financial regulator in the South American country, Financial Superintendence also known as Superintendencia Financiera or Superfinanciera would keep an eye on this pilot test. The test would be conducted within a newly constructed regulatory sandbox that was initiated by the agency.
As it stands, some of the top financial institutions in the country have already teamed up with some of these crypto exchanges. For instance, Banco de Bogotá would be working with Bitso and Buda. Bancolombia pairs with the Gemini branch of Colombia. And Binance would be pairing with the Davivienda bank and a fintech firm named Powwi.
Other financial institutions have also been paired with a crypto exchange partner but the authorities rejected five other proposed partnerships.
The partnered institutions have to think through their decisions to transact crypto assets via the sandbox, with the financial regulator warning that the “high standards” that were usually maintained in the traditional banking system must also be strictly adhered to in these crypto-related dealings. The pilot test scheme is going to last for at least a year.
The regulator also warned that this pilot scheme does not change the status of cryptocurrency in the country. It added that the scheme also does not authorize these banks to pursue a crypto-related business outside of the confines of the sandbox. Under Colombia’s law, crypto assets do not currently enjoy any form of legal backing however, the country is beginning to pivot into being a more crypto-friendly state.