Colombian government to launch a state-backed cryptocurrency to improve tax collection 

The government of Colombia announced that it plans to release a digital currency to reduce tax evasion and better track transactions made by citizens. This new currency would help the government keep tabs on spending and could also potentially be used to finance large projects.

The proposed measure would include restrictions on cash payments and transactions worth more than 10 million Colombian pesos ($2,400) if passed. This will allow the government to be more transparent and ensure that money isn’t being laundered for criminal activities. Colombia has had a history of violence and drug trafficking, and it is believed that the government is interested in this new digital currency to reduce the opportunity for money laundering.

Colombia Introduces Digital Currency: catches up with the global fad.

Colombia is not the only country looking to digitize its economy. According to Luis Carlos Reyes, head of the DIAN, the Colombian tax authority, many countries are planning to launch their own digital currencies soon. This move would allow them to understand better and control the flow of money in their economies.

Reyes told local news outlet Semana that President Gustavo Petro plans to introduce a series of measures to curb tax evasion, which is estimated to amount to 6-8% of Colombia’s GDP.

Reyes believes that introducing a digital currency would increase the traceability of transactions. Consequently, this would make it difficult for merchants to use cash as payment to avoid taxes. 

What will be the effect on cash transactions?

Digital currency would not be the only new thing. Other measures are currently being studied. One of these is a restriction on cash payments above a certain amount. However, if these changes were to go through, it might disrupt how Colombians typically pay for things. Many Colombians still use cash as their primary payment method, even though the pandemic caused a decrease in cash usage. In addition, central Bank of Colombia statistics show that the circulation of bills has risen back up to its pre-pandemic levels.

According to data from the Financial Superintendency, Colombians still prefer cash for many everyday payments, including transportation (94%), groceries (80%), cell phone top-ups (78%), and rent (77%). However, there are signs that this may change as more people begin to use electronic methods such as debit and credit cards.