Peru’s Journey Toward Crypto Regulation

Summary:
In December 2021, Peru introduced a draft bill to regulate cryptocurrency transactions, marking its first attempt to create a clear regulatory framework for the crypto sector. Despite this, major financial institutions like the Central Reserve Bank of Peru and others do not back digital currencies. The legal status of crypto in Peru remains ambiguous, with some restrictions on advertising financial services linked to crypto unless done by regulated institutions.
Recent developments include the Lima Stock Exchange adding three bitcoin spot ETFs in February 2024 and the Central Bank’s partnership with India’s NPCI to enhance payment systems. Peruvian villages have seen a rise in Bitcoin usage, driven by the NGO Motiv, which has established Bitcoin micro-economies to aid unbanked communities.
The new crypto asset law proposed in 2021 aims to define crypto assets, regulate service providers, and create a public registry. It mandates providers to inform users about the risks and non-legal tender status of cryptocurrencies. The tax framework specifies that companies are taxed on crypto sales as capital gains, while individual transactions are generally untaxed unless frequent.
Peru’s journey with crypto regulation has been evolving, with significant milestones like the 2018 PeruCoin project and the 2023 decree making crypto exchanges Virtual Asset Service Providers subject to anti-money laundering regulations. The government’s efforts face opposition, and the future of crypto integration into Peru’s economy remains uncertain.