MONTEVIDEO, URUGUAY, OCTOBER - 2018 - Empty chamber of senators at legislative palace of uruguay. — Stock Editorial Photography

Uruguay mulls bill giving central bank control over digital asset service providers

bill has been sent to Uruguay’s legislature seeking a complete overhaul of firms’ activities in the virtual assets industry. Local publication El Observador wrote that the main object of the proposed legislation is to confer legal powers on the Central Bank of Uruguay (BCU) to exercise control over such companies.

The bill defines virtual asset service providers as “entities that regularly and professionally provide one or more virtual asset services to third parties.” While these services may be vague and ambiguous, the filed regulation attempts to narrow them down to digital assets’ transfer, custody, and administration.

All entities falling under this category will be under the direct supervision of the Superintendence of Financial Services (SSF), an arm of the central bank. If passed into law, the bill will change the regime of Uruguay’s security laws and see digital assets being considered “book-entry securities.”

“With the proposed modifications, both the previously regulated subjects and the newly incorporated entities that operate with virtual assets will be subject to the supervision and control powers of the Central Bank of Uruguay,” read a portion of the bill.

The proposed law aims to ensure uniformity across all financial service providers. El Observador notes that the move will provide stricter Anti-Money Laundering (AML) rules and Know Your Customer (KYC) regulations to prevent misuse of digital assets.

Tighter control of advertising

Binance ran an advert in Uruguay that the country’s central bank found to be a violation of existing financial rules. The banking regulator flagged the ad with the Superintendence of Financial Services warning that “the call to the general public for the application of their savings can only be done in the authorized form.”

“Binance is aware of the communication from the Central Bank of Uruguay and has already initiated a dialogue with the authority,” read Binance’s statement.

Binance retracted the advertisement in question and disclosed that it was in talks with regulators to understand the rules better, reaffirming its commitment to ensuring full compliance for the growth of the ecosystem.

Uruguay was one of the first countries to experiment with a central bank digital currency (CBDC) pilot in 2017, and since then, the early enthusiasm has waned. Signs of a resurgence appeared last year when a lawmaker presented a bill to confer legal status to digital assets.

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