Colombia’s Digital Currency Aimed at Slashing Tax Evasion Crimes

Tax evasion in Colombia is a major issue and is estimated to account for up to eight percent of the country’s gross domestic product (GDP) so far. In a bid to curb tax evasion crimes in the Latin American nation, Colombia has decided to dive straight away into planning a roadmap for its national digital currency. Under the newly officiated Colombian President Gustavo Petro, the government of Colombia is banking on the use of its digital currency to prevent financial crimes thriving in the country.

The objective of the creation of this digital currency is to replace cash payments around taxes with this digital currency, all within the framework of a reformed new monetary policy, Semana.com quoted Luis Carlos Reyes, the head of the Colombian Tax and Customs National Authority as saying in an interview.

For now, it remains unclear whether Colombia is exploring into the CBDC kind of a national digital currency, or an asset-backed national currency similar to Venezuela’s Petro digital currency project.

A CBDC or a central bank digital currency (CBDC) is a blockchain-based payments solution that is regulated and controlled by the central banks. At present, India, Jamaica, and China are among several other nations that are working on their CBDCs.

For now, Colombia is awaiting what changes its crypto-friendly President brings to the existing financial system there.

Back in 2017, Colombian President Petro had backed Bitcoin by calling it an instrument that would take power back from the government and hand it to the people, a report by CoinTelegraph said.

As for now, Colombia does not accept any cryptocurrency as a payment alternative to its fiat Peso.

Earlier this year, the Colombian tax authority had also reportedly reminded taxpayers that they need to start registering cryptocurrencies in their statements starting this year.

It is estimated that over 3.1 million people, 6.1 percent of Colombia’s total population owned cryptocurrency in 2021, as per Triple-A.