Status of cryptocurrencies in Ecuador requires clarification, Central Bank director says

The director of Ecuador’s Central Bank Guillermo Avellán says that cryptocurrency is not illegal in the country, but thinks trading must be regulated.

His comments about the confusion in the status of cryptocurrencies come in the wake of a recent official Central Bank of Ecuador (BCE) statement that warned citizens about the volatility of crypto. The statement also explained that crypto did not meet the requirements of legal tender in the nation.

And it came as Worldcoin (WLD) adoption continues to gather pace in Ecuador.

The bank’s statement appears to have stoked fears that it is contemplating a ban on crypto trading. But Avellán posted on X to clarify that crypto is “not prohibited” in Ecuador. “At no time has the ECB banned investment in cryptoassets, as this is not within our powers to do so.” He added: “The Central Bank has the power to control that the only means of payment authorized in the country is the United States dollar.”

However, Avellán also opined that Ecuador needs to clarify the law that regulates investment in cryptoassets, in order to protect investors, promote innovation, and strengthen dollarization.” “I recommend reviewing Article 94 of the Monetary and Financial Code, which stipulates that all transactions, monetary and financial operations, and their accounting records must be expressed in United States dollars but, at the same time, does not expressly prohibit the use of crypto.”

He claimed that crypto could bring about “risks” if it were “commercialized assets outside the legal framework.”

Some international bodies have previously criticized Ecuador for its lack of crypto regulation. But crypto has come under increased scrutiny since Worldcoin offices opened in the country earlier this year.

Media outlets say “thousands of Ecuadorians” have since “flocked to Worldcoin scanning centers.” This has drawn a response from the likes of the Superintendency of Companies, Securities, and Insurance.

The Superintendency said on August 6 that it is “concerned about news circulating in the media and social media networks about irregular activity carried out [by] Worldcoin.” The Superintendency has noted that Worldcoin is not regulated by the Ecuadoran state. It also encouraged citizens “not to hand over” their biometric data.

WLD popularity has surged in Latin America this year. But this has also led to regulatory pushback, with the Worldcoin operator moving to change the way it collects data in nations like Chile.
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Credit: CryptoNews