Colombia Banking Ban on Crypto Transactions: What It Means for Users and Businesses

Colombia doesn’t ban cryptocurrency. But if you try to use your bank account to buy, sell, or send Bitcoin, Ethereum, or any other crypto, you’ll hit a wall. That’s because Colombia’s banking system is legally barred from touching crypto transactions - not because it’s illegal to own crypto, but because banks can’t touch it. This contradiction creates confusion, frustration, and hidden costs for everyday users and businesses alike.

What Exactly Is Banned?

The Financial Superintendency of Colombia (SFC) made it clear in 2022: supervised financial institutions - that means banks, credit unions, and most fintechs - are forbidden from:

• Holding crypto assets in custody
• Investing in cryptocurrencies
• Processing payments or transfers involving digital assets
• Offering crypto-based financial products

This isn’t a suggestion. It’s a hard rule. If your bank account is linked to a crypto exchange like Wenia or Bitso, and you try to deposit pesos directly from your account to buy Bitcoin, the transaction will fail. The bank’s system is programmed to block it. Even if you call customer service, they won’t help you bypass it - they’d risk fines up to $1.5 million.

Why Did Colombia Do This?

The SFC’s reasoning is simple: crypto is risky. And banks are supposed to be safe. In 2022, global crypto collapses - like TerraUSD and FTX - sent shockwaves through regulators worldwide. Colombia didn’t want its banks dragged into the chaos. The regulator saw crypto as a potential tool for money laundering, tax evasion, and fraud. So they drew a line: crypto is your problem. Don’t bring it into the banking system.

But here’s the twist: the SFC doesn’t say crypto is illegal. You can still buy it. You can still trade it. You can even mine it. The ban only applies to institutions regulated by the SFC. That’s why you’ll find crypto ATMs in Bogotá, crypto exchanges operating legally, and even a stablecoin called COPW - launched by Bancolombia, Colombia’s largest bank.

How Do People Still Buy Crypto?

If banks won’t help, how do Colombians get into crypto? They find workarounds:

• P2P platforms like Paxful and LocalBitcoins connect buyers and sellers directly. You pay cash, send a bank transfer to a trusted trader, or use digital wallets.
• Payment service providers (PSPs) like Nequi or Daviplata allow users to send money to crypto exchanges, as long as they don’t directly link the transaction to the exchange. It’s a gray zone.
• Cash deposits at convenience stores or bank branches are still common. You pay cash to a middleman, who then sends you crypto.

These methods work - but they’re slow, risky, and expensive. You pay higher premiums. You trust strangers. And if something goes wrong, there’s no bank to reverse the transaction.

The Compliance Nightmare for Businesses

For crypto businesses in Colombia, the rules are even tougher. Every transaction over $150 must be reported to the Financial Information and Analysis Unit (UIAF). That includes:

• Full name and ID of sender and receiver
• Exact amount and timestamp
• Source of funds
• Reason for the transaction

Small exchanges and startups can’t afford the software to track this automatically. Many have been fined. One PSP paid $1.5 million in penalties in 2024 for missing data points. Larger players like Bancolombia’s Wenia exchange spent millions building internal compliance systems - hiring lawyers, installing AI monitors, training staff.

And it’s not just about reporting. The Superintendency of Companies requires every business dealing with crypto to have a full anti-money laundering (AML) program - the same rules banks follow. That means Know Your Customer (KYC) checks, transaction monitoring, internal audits. For a small business, that’s a huge cost.

Why Is Bancolombia Allowed to Run a Crypto Exchange?

This is the biggest contradiction in Colombia’s system. Bancolombia - the country’s largest bank - runs Wenia, a licensed crypto exchange. It even launched COPW, a peso-backed stablecoin. How is that legal?

The answer: Wenia isn’t a bank. It’s a separate legal entity under a different regulatory umbrella. Bancolombia owns it, but the exchange doesn’t use the bank’s payment rails. Users fund Wenia through P2P transfers or cash deposits - never directly from a Bancolombia account. The bank stays clean. The exchange handles the crypto. It’s a loophole, but it’s intentional.

This shows the government’s real stance: they don’t want banks involved, but they’re okay with institutional players offering crypto services - as long as they’re isolated.

How Does Colombia Compare to Neighboring Countries?

Colombia’s approach is middle-ground. Not a ban. Not full acceptance. Just heavy restrictions.

• Brazil passed full crypto tax laws in 2024 - now you pay capital gains tax on crypto trades.
• Argentina lets Bitcoin be used for international trade. Banks can’t stop it.
• Chile approved three crypto custodians in early 2025 - no banking ban at all.
• Mexico updated its Fintech Law to include crypto custody and management - banks can now legally hold crypto for clients.
• Peru launched blockchain-based government bonds in 2025.

Colombia is the only country in the region that lets crypto exist outside the banking system while still allowing big institutions to build crypto products - just not through their banks.

What About Taxes?

Even though you can’t use your bank to trade crypto, you still owe taxes. The Colombian tax authority (DIAN) treats crypto as an intangible asset. That means:

• If you sell Bitcoin for a profit, you pay income tax on the gain.
• If you run a crypto business, you pay corporate tax.
• If you receive crypto as payment for services, it’s treated as income at market value.

Most people don’t report it. But DIAN is starting to demand data from exchanges. Wenia and other licensed platforms must share transaction records with tax authorities. If you’re trading large amounts, you’re at risk.

What’s Next for Colombia?

The SFC’s original regulatory sandbox - a program that let crypto startups test products under supervision - expired in December 2023. No replacement has been announced. That’s created uncertainty. Startups are stuck. Investors are waiting.

But signs point to change. Finance Minister Ricardo Bonilla said in June 2023: “Cryptocurrencies are a reality.” He added that regulation must protect the Central Bank’s monopoly on currency issuance - but he didn’t say no to crypto.

Experts believe Colombia will eventually pass a full crypto law. The question isn’t if - it’s when. The pressure is growing. Colombians are using crypto to send remittances, avoid inflation, and access global markets. The banking ban is becoming a bottleneck.

One possible path: a regulated bridge between crypto and banks. Imagine if the Central Bank allowed crypto exchanges to hold accounts in a special, monitored system - not regular bank accounts, but something like a “crypto gateway.” That could let users move pesos to crypto without breaking the rules.

Until then, Colombia’s crypto scene will keep operating in the shadows - legal to own, hard to use, risky to trade, and expensive to comply with.

What Should You Do If You’re in Colombia?

If you’re a user:

• Don’t try to link your bank account to a crypto exchange. It won’t work.
• Use P2P platforms with verified traders.
• Keep records of all transactions - you’ll need them for taxes.
• Never send money to strangers without a trusted escrow.

If you’re a business:

• Build compliance into your product from day one. Use RegTech tools to automate reporting.
• Separate your crypto business from your banking operations.
• Partner with licensed PSPs that already handle the reporting burden.
• Don’t assume the rules won’t change. Prepare for stricter oversight.

Frequently Asked Questions