Ecuadorian banks must adopt new cryptocurrency in 360 days

Ecuadorian banks must adopt new cryptocurrency in 360 days

In addition to the many debates surrounding the growth of bitcoin, officials in Ecuador have decided to make local banks adopt a state digital currency in order to contribute to economic stability.

After the Resolution 064-2015-M mandate was released last month, the country’s central bank has allowed 360 days for Ecuadorian banks to adopt this new currency.

The mandate will be applied in stages depending on the assets that particular institutions possess. For example, those that hold under $150 million will have the full 360 days, whereas those that hold $1 billion in assets will only have 120 days.

According to Pan Am Post, the document states that all financial institutions must provide an electronic tender option for all services they offer and will offer in the future. Alongside this, each bank will have to open an account with the Electronic Currency System that the government run.

Economic Policy Minister, Patricio River Yánez, signed this ruling to ensure that all businesses operate within the Electronic Currency System. “All entities of the public, private, and cooperative financial sectors are obliged to incorporate themselves as macroagents within the Electronic Currency System,” said Yánez.

The document provides a definition for macroagent which explains who will have to adopt this new digital currency: “companies, organisations, and public or private institutions; financial institutions of the popular and cooperative system; that maintain a network of establishments available for clients and are capable of acquiring mobile money, distributing it, or converting it into varieties of money.”

The official currency of Ecuador is the US dollar and the central bank of the country, Banco Central del Ecuador (BCE), will ensure that the cryptocurrency will be equivalent and convertible to US dollars, Pan Am Post reported.

However last year, general manager of BCE Gustavo Solórzano Andrade, said that as the legal tender in Ecuador is the US dollar, if someone from the country wants to deal in digital currencies, they would have to do so outside of Ecuador.

The only currency of legal tender in Ecuador is the US dollar, used in all economic operations through payment methods authorised by the Central Bank of Ecuador. In this context, if an Ecuadorian citizen wishes to invest in bitcoins or another cryptocurrency it will be an individual and personal decision, and he will have to do so outside of Ecuadorian territory,” said Andrade.

Ecuador’s banking and securities body superintendent, Pedro Solines Chacón, also agreed with Andrade and said that the ban was put in place because bitcoin has no regulation or supervision which could lead to money laundering and the financing of terrorism.

Luis Nuñez, a member of Ecuador’s bitcoin community, on the other hand, believes that the lack of privacy within the Electronic Currency System is a far greater concern than any risks that surround cryptocurrencies.

With the electronic currency all transactions are linked to your identity, something which doesn’t happen with physical money, so it seems like a de facto acquired right is being progressively lost,” Nuñez said in conversation with the Pan Am Post.

Nuñez explains that the BCE’s new electronic payment system follows two distinct models. “Bitcoin has a decentralised model that has clear rules: it’s transparent and public, it promotes freedom, and it’s adopted freely; the other is a centralized model that seeks to control information, and in which the rules conform to the political vision of the day,” Nuñez said.

Nevertheless, 23,927 electronic-money accounts have been opened in Ecuador since May 18th 2015, according to BCE data.