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“Bitcoin is armor to fight the war economy of Colombia and Venezuela”

The Colombian economy is going through difficult times amid the most important wave of protests in the country’s recent history. A similar situation occurs in Venezuela where the inhabitants have had to cope with hyperinflation. Faced with both scenarios, residents have taken refuge in bitcoin (BTC), due to its qualities as a store of value. A scenario that the parent company of Panda Exchange has closely followed, as part of the cryptocurrency market in Latin America.

In this interview with CriptoNoticias within the framework of the Jalisco Talent Land Digital 2021 event, the CEO of Panda Group, Arley Lozano, breaks down the current panorama of cryptocurrency regulation in Colombia. He talks about the expectations that the company has regarding future legislation, as well as the usefulness that Venezuelans and Colombians are giving bitcoin. This as a consequence of what he calls “a war economy”, whose battle front is in Cúcuta, precisely the border between both nations.

Lozano, also known as Vakano, points out that the crypto-asset-based economy that exists in Colombia and Venezuela is not the product of an act of magic, but rather it is a reflection of how bitcoin is responding to the needs that the inhabitants of these countries have, including Venezuelan immigrants.

When a person is in the middle of a war, surely the first thing they look for is shelter and camouflage, in addition to protection for everything they believe of value, because that will guarantee their livelihood. That is precisely what Lozano describes when he talks about the Venezuelans who have emigrated to the coffee-growing country, which according to Migración Colombia, as of January 31, 2021, were more than 1,742,927 expatriates, of which 983,343 are irregular.

For Arley Lozano bitcoin is part of the arsenal that Venezuelans are using to protect themselves from the war economy in which they are living. Source: Zoom screenshot.

Cryptocurrencies are being used to send remittances and transport value for workers outside of Venezuela, for whom it is vital to send money home or to their families. In addition, we see that all these people who emigrated prefer cryptocurrencies because they are free to use, they do not need a passport or the documents required by the Colombian banking system.

Arley Lozano, CEO of Panda Group.

The financial services most requested by Venezuelan migrants in Colombia are savings products, remittances and payment systems. However, to have at least one of them, the person requesting it must have a regular status, such as the Special Permit to Stay (PEP). But not all the migrant population has it, so the degree of bankarization of this population is barely 15%, according to the country’s digital media.

Faced with this situation, many Venezuelan migrants adopt cryptocurrencies because with them they can cover their financial needs without further requirements, as Lozano commented.

Cúcuta: a bitcoinized territory

Vakano adds that, in the Colombian city of Cúcuta, there is a stark reflection of the economic situation that is affecting Venezuelans. In the Caribbean country, hyperinflation pulverizes the bolivars and the difficulties derived from the economic crisis are aggravated for the population that increasingly seeks US dollars and other currencies as an alternative.

Cúcuta is a natural market for cryptocurrencies. We have ATMs [automáticos de Panda Group] installed there because many people go from the sister country to exchange their bitcoins to be able to market and buy medicine. In Cúcuta, adoption is something that can be felt because it is a reality that cryptocurrencies are being used as a refuge of value there. Venezuelans pass the bridge [Simón Bolívar], they go through the trails and arrive in Cúcuta where they can go to buy products and exchange their bitcoins for pesos and purchase their basic necessities. That is why we have many of our equipment installed on the border with Venezuela.

Arley Lozano, CEO of Panda Group.

The leader of the business conglomerate Panda Group details how they have grown in four years to respond to the needs of their customers. Today they have a variety of products such as a cryptocurrency exchange and the payment service with crypto assets Xpay. Likewise, the company provides services on the Panda BTM cryptocurrency exchange platform and is strengthened through alliances with other companies in the industry, such as BitGo, for example, which is its institutional custodian.

Of all the products of the company Vakano considers that the one with the highest growth is the payment processor Xpay, which is widely accepted in the market “Because it is designed for non-bitcoiner people.”

Colombia shows more respect for bitcoin

The executive adds that Panda Group has been growing at the rate that bitcoin adoption has done in Colombia, even gaining momentum in recent months. He even dares to say that out of every 100 people living in the country, at least 70 have heard of bitcoin and 45 of them have real knowledge about their technology.

It seems that while they have remained in confinement many people have been studying about cryptocurrency. Although it should be noted that people in Colombia have always been very friendly with crypto, but citizens are one thing and what has been seen with the government is quite another.

Arley Lozano, CEO of Panda Group.

His comment comes because, until recently, Colombian regulators were not so friendly with cryptocurrencies, to the point that the Buda exchange was forced to close operations in the country for a while. However, the situation has taken a turn recently, since banks and multiple public institutions, they are opening the doors to bitcoin or its associated technology.

Now from Panda Group we have seen how everything has changed. Adoption has allowed perception to change in a more positive way. It is not said so much that bitcoin is only for bad things, and that has helped us to move forward. Now we see the acceptance of many, there are even banks calling us and telling us that now they want to work with us. We have seen companies and people who rejected us 3 years ago who have called us to say that they want to work with us and that is why we think that the sandbox is too positive for this entire industry, for Panda and for all of us who are doing something with cryptocurrencies In colombia.

Arley Lozano, CEO of Panda Group.

The CEO of Panda Group believes that Colombia’s regulatory sandbox will stamp a positive footprint for the entire cryptocurrency industry in the region. Source: Panda Group / instagram.com

A sandbox for Colombian regulators to learn about bitcoin

At the beginning of last year, the Ministry of Finance announced the creation of an experimental environment, under the supervision of the Financial Superintendency of Colombia, with the intention of designing a regulatory framework. Later the regulatory space or sandbox was created for banks and other institutions to carry out tests with BTC, which could give rise to a complete integration between the traditional financial system, exchanges and users.

The Financial Superintendency then structured a pilot plan for the digital ecosystem to carry out tests in conjunction with cryptocurrencies through sandbox. This is how nine alliances were established between local banks and bitcoin exchanges and other crypto assets.

For this pilot plan, Panda Exchange will work hand in hand with Colombian fintech Movii. “We will go on the air from August 1 and from there they will begin to count the 12 months of testing,” said Lozano.

The most positive thing that we hope is that regulators know and lose their fear of cryptocurrencies. Let it be known that with them it is also possible to mitigate all the risks associated with money laundering and terrorism in a controlled manner. We also aspire that [los reguladores] learn that bitcoin, unlike cash, is easier to track. That the whole environment can be controlled and that it is not as complicated as it is often mentioned.

Arley Lozano, CEO of Panda Group.

Lozano hopes that the legislation to regulate cryptocurrencies in Colombia will give more relevance to the industry. Source: FabrikaPhoto / elements.envato.com

From his perspective, the regulation of cryptocurrencies is necessary, although he recognizes that this represents a change that involves several elements that are not usually seen as well. Among them he mentioned the payment of taxes or the “Know Your Client” (KYC) forms that are part of the anti-money laundering standards prescribed by the Financial Action Task Force (FATF).

So far we have the pre-license and at the end of next year we will know what will happen. It will be then when we will be told if there are clear rules [para la regulación] or if the Government will suddenly say that this regulation of cryptocurrencies rather belongs to the Ministry of Technology. This is the institution that regulates gambling or remittance platforms here in Colombia and not the Superfinanciera, which is really more concerned about its supervised banks, which are the banks.

Arley Lozano, CEO of Panda Group.

He adds other positive aspects that he sees to bitcoin regulation in Colombia, such as that the ecosystem be given greater relevance or that it begins to be understood, once and for all, that “bitcoin is not a nerd game as it was said to have been since 2009.”

For Lozano, the regulation will also help identify the scams and pyramid schemes that have done so much damage to the Colombian bitcoin market. This taking into account that, in the country, since 2015 cryptocurrency fraud abounds, presenting a gloomy outlook for the strengthening of the industry in the country. The figures are alarming, because in mid-2020 almost 400 cases of extortion were registered in Bogotá. In most, those involved ordered payments with BTC.

Lozano hopes that, ultimately, the legislation encourages the undertaking of projects based on cryptocurrencies. In short, «what regulation brings is hyperbitcoinization, which is what we all want, as will happen in El Salvador, where bitcoin will be talked about as one more currency of the country and that freelancers can easily collect their salaries in BTC from Europe, change them and pay taxes, “said Vakano during the talk he gave at the digital event in Mexico.

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