Colombia’s Poor Banking Infrastructure Great Potential for Bitcoin

The South American country of Colombia has a crumbling financial system but the bitcoin market has enormous potential. Bitcoin.com interviewed SurBTC’s CEO Guillermo Torrealba about the bitcoin market in Colombia.

Also read: Colombia’s First Bitcoin Exchange Closed by Regulators

Colombia has Enormous Potential

SurBTC operates bitcoin exchanges in Chile and Colombia. The company launched the Colombian exchange at the end of August last year. “Today Chile is several times larger than Colombia,” Torrealba told Bitcoin.com.

Colombia’s “archaic banking infrastructure” presents opportunities for many bitcoin services to deliver innovative solutions “without the need of going through the traditional financial industry,” he described, noting that:

The potential there [Colombia] is enormous, especially because of the lack of banking, financial and technological infrastructure in the country.

Findings by the International Finance Corporation (IFC), a member of the World Bank Group, support his point. Colombia’s economic potential and competitiveness are “constrained by the poor quality of its national infrastructure,” the IFC wrote in its April report. It also estimates that the country suffers an annual infrastructure financing gap of as much as $1.5 trillion but traditional sources of infrastructure financing such as banks, governments, international financial institutions cannot meet this financing needs.

“Since the global financial crisis of 2008, structural weaknesses in the banking sector have led to deleveraging and restrained credit growth. And new banking regulations have adversely affected the ability of banks to provide long-term financing,” the Corporation wrote.

A Delicate Environment but Bitcoin is Not Illegal

“Operating in Colombia has way more challenges than what we expected in the beginning,” Torrealba revealed, citing its “bank-relation-intensive” operation.

The Colombian bitcoin ecosystem is “growing very fast but very contaminated with Bitcoin-based ponzi schemes,” he explained. That is the reason the Financial Superintendency post official press releases warning about the risks of bitcoin and has prohibited banks from “touching” it, he added.

However, the warning was ambiguous “which has caused great confusion among people and companies.” Nonetheless, Torrealba said:

The potential is great and the good the technology can deliver here is incredibly large. It’s just a hard and delicate environment to be around.

Regarding recent news articles claiming that the Head of the Financial Superintendency, Francisco Reyes Villamizar, has declared bitcoin illegal, Torrealba said “This is not accurate,” citing that his warning did not mean that bitcoin is illegal. “In fact, it isn’t and is the reason why we’re still operating,” he concluded.

All the while, Localbitcoins’ volume in Colombia has been growing steadily over the years, although the volume is still small.

What do you think of the bitcoin ecosystem in Colombia? Let us know in the comments section below.

Images courtesy of Wonderful Engineering, Localbitcoins, IFC

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