Colombia's First Bitcoin Exchange Closed by Regulators

The first Bitcoin exchange in Colombia, Colbitex, which opened just two weeks ago, has gone offline – apparently due to legal issues with digital currency in the country.

Also read: USMS to Auction 2,719 Seized Bitcoins This Month

Colbitex Goes Offline

Spanish-language cryptocurrency news site DiarioBitcoin reported the closure is a temporary measure while the company and regulators determine the legal framework under which it may operate, if at all.

At present, Colbitex’s website is offline with users directed instead to a basic support page to submit fund withdrawal requests. Local financial regulator the Superintendencia Financiera de Colombia permits only transactions that have a Colombian peso equivalent.

Since Bitcoin is not considered a “real currency,” there can be no official exchange rate. Colbitex’s support page notes that the regulator had not explicitly banned the use of Bitcoin in Colombia, but in May 2016 had issued a warning along with central bank Banco de la República de Colombia about the risks associated with using digital currencies.

The boilerplate risk warning has been repeated by central banks and financial regulators around the world since the beginning of 2014.

Bitcoin Taking Root in Colombia

Colbitex had proved popular with locals, recording 103,495,995 Colombian pesos ($34,528 USD) in transaction volumes on August 6th.

Colbitex had been operating in “test-mode” since opening for business on July 25th, though co-founder Roman Parra had said in an earlier interview that the exchange complied with all appropriate legal, tax and commercial laws and its initial test period was for customers to familiarize themselves with the concept of trading Bitcoin. The company offered the only Bitcoin exchange for Colombian peso holders, with limit and market orders and online wallet storage.

Meanwhile, statistics from peer-to-peer bitcoin exchange LocalBitcoins have shown increasing trading activity in the country, which is a pretty good sign of growing demand.

Bitcoin’s Growing Pains in South America

Parra also stated that Bitcoin growth in Colombia had been slow compared to neighboring countries like Argentina and Venezuela, but that he had high hopes for the exchange to expand into other markets and offer trading in other assets.

A report in March this year claimed that two men had been arrested in Venezuela “for mining bitcoins,” though the arrest may instead have been triggered by associated tax issues than the act of mining itself.

Venezuela has at least one online Bitcoin exchange, Surbitcoin, still operating – although it also closed temporarily last month after a local banking partner froze its fiat accounts.

Do you live in Colombia or Venezuela? What is your preferred method of trading Bitcoin if online exchanges are not available?

Images courtesy of Pixabay, criptonoticias.com