The current status of virtual assets regulation in Uruguay

Wednesday 17 November 2021

Josemaría Alvaro Motta Mambretti
Guyer & Regules, Montevideo


We all have witnessed the recent worldwide developments in virtual assets with the aim of analysing whether regulating these activities would be convenient or necessary. On the one hand, several countries – such as Ecuador and Spain – have allowed the private intermediation of virtual assets; on the other hand, other countries – such as China – have banned transactions using cryptocurrencies.

Being a small country with legal security and political stability, Uruguay has not been indifferent to this worldwide phenomenon. Several exchange companies are analysing or setting up local companies or regional hubs in Uruguay, with the purpose of providing spot exchange of cryptocurrencies, derivatives and non-fungible tokens, among other crypto services. Furthermore, at a local level, some real estate sales and purchases have been made using payment in the form of cryptocurrencies. We have also seen an increase in Uruguayan users of virtual assets. However, Uruguay does not yet have any specific cryptocurrencies’ regulations in place; neither addressing the cryptocurrencies themselves, nor the entities providing services, commercialising cryptocurrencies, nor tax-related regulations.

Because of this, the Uruguayan political system began to study the possibility of implementing a regulation of virtual assets. In August 2021, a draft bill was submitted to the Uruguay Congress that seeks to regulate the production and commercialisation of virtual assets. Furthermore, on 1 October 2019, another draft bill was submitted to Parliament which seeks to create a minimum legal framework. This would give the Central Bank of Uruguay (CBU) the power to regulate crypto assets in their various forms, including cryptocurrencies and crypto tokens, following the principles set forth in the Project.

Finally, the CBU – supervisor of the Uruguayan payment system – has created an Innovation Office which is analysing, among other things, the different aspects of virtual assets and whether to regulate them. This office issued a recent statement regarding its position on virtual assets, analysed below.

This article will analyse the current legal regime of virtual assets in Uruguay from different perspectives.

Regulatory framework: Central Bank of Uruguay

As of today, Uruguay does not have any specific cryptocurrency regulations in place; neither regulating the cryptocurrencies themselves nor the entities providing services and commercialising cryptocurrencies.

During the past few years, the CBU had publicly informed the public that it was analysing the use of crypto currencies, such as Bitcoin, in order to determine whether it should be considered and regulated in Uruguay as electronic money and subject to supervision of the regulator.

According to Law No 16.696, only the money and coins issued by the CBU shall be of legal tender throughout the national territory. In this sense, the CBU defines money as ‘any asset that is widely accepted as a means of payment’. In addition, money also fulfils the functions of unit of account and store of value. Furthermore, Law No 19.210 regulates, among other things, electronic money instruments and issuers of electronic money. Article 2 of Law No 19.210 provides that electronic money instruments must have certain characteristics, which include:

  • the monetary value shall be stored in electronic means, such as a chip in a card, a mobile phone, a computer hard drive or server;
  • it must be accepted as payment by entities or persons other than the issuer and have cancellation effect;
  • it must be issued for an amount equal to the funds received by the issuer;
  • it must be convertible into cash by the issuer at the request of the holder, but only the unused monetary amount of the electronic money instrument issued; and
  • it must not accrue interest.

To be able to issue electronic money instruments, an entity must be registered before the CBU as an issuer of electronic money or as a bank. Initially, it could be assumed that virtual assets would be considered as electronic money, but cryptocurrencies do not qualify under the definitions contained in the legislation. Further, they are not backed by any central bank.

Therefore, after three years, the CBU published a statement[1] regarding its position on virtual assets. The CBU defines virtual assets as ‘the digital representation of value or contractual rights that can be stored, transferred and traded electronically through distributed ledger technologies (DLT) or similar’. In addition, the CBU recognises that cryptocurrencies are not considered as legal tender, unlike the Uruguayan peso, as they are not issued or backed by any central bank.

Furthermore, regarding the issuance and trading of virtual assets, the statement confirms that these are not activities that fall within the scope of CBU regulations and are not subject to specific regulations. Therefore, those who carry out such activities are not covered by the financial user protection measures provided by CBU to entities regulated and supervised by it. In other words, companies or individuals that carry out activities with virtual assets do not fall under the CBU’s regulations and are therefore not regulated.

Finally, the CBU informs that it is conducting a detailed analysis of the development of these operations through a working group. It will prepare a proposal by the end of the year to amend the current legal provisions to establish a clear framework to move towards the regulation of these activities.

Regardless of the virtual assets regulation, a company that provides virtual assets services to users that sets up in Uruguay, or operates through a foreign entity but is considered to be doing business in Uruguay, may fall in the scope of another licence or authorisation from the CBU.

In these cases this sort of activity may fall under one of the following licences:

  • provider of payment and collection services (Prestadores de Servicios de Pago y Cobranza), defined as an entity that provides payment and/or collection services;
  • electronic money issuing institution (Institución Emisora de Dinero Electrónico), defined as an entity that issues e-money to its customers; or
  • funds transfer company (Empresa de Transferencia de Fondos), being those companies that, on a regular and professional basis, provide the service of receiving and sending money orders and transfers, domestic and abroad, regardless of the operational modality used for this purpose (electronic transfers, instructions by telephone, fax, internet, etc).

The Anti-Money Laundering Regulation

From an anti-money laundering (AML) perspective, the CBU has already publicly informed that, during the course of this year, it may issue certain regulations related to AML/know your customer (KYC) principles that are applicable to virtual assets. This follows the interpretation made by the Financial Action Task Force (FATF) in Recommendation No 15, which would apply to entities that engage in activities related to virtual assets.

However, if a company falls under one of the CBU licences, it will be monitored by, or  be under the control of, the CBU according to Section 12 of Act 19.574 and subject to general AML/KYC obligations (or specific ones in certain cases). In all cases, such obligations will include:

  • having policies and procedures in place for the prevention of money laundering and financing of terrorism;
  • having risk matrices in place and classifying clients under such risk matrices to determine the level of due diligence to be conducted regarding its clients (simplified, normal or intensified due diligence), including searches in public, private and United Nations lists.

The Tax Authority perspective and regulation

From a tax perspective, in August 2021 the Tax Authority (Dirección General Impositiva) ruled on the first real estate transaction with cryptocurrencies in Uruguay through Consultation No 6.419.[2]

A public notary – acting as withholding and collection tax agent – consulted the Tax Authority regarding the generation and calculation of national taxes in connection with a transaction involving the exchange of a real estate property and cryptocurrencies. To provide an answer, the Tax Authority had to define the legal nature of the cryptocurrencies which, in turn, would determine the taxes applicable to the projected transaction (sale or swap).

The Tax Authority understood that the transaction was not a purchase and sale of real estate, since, in accordance with the provisions of article 1661° of the Civil Code, purchase and sale ‘is a contract in which one of the parties undertakes to give a thing and the other to pay for it in money’. In the case in question, the Tax Authority understood that there would be no payment in money since the cryptocurrency is not such.

Moreover, the Tax Authority sides with the CBU’s position by understanding that cryptocurrencies do not clearly meet the conditions to be considered as money or electronic money.

Finally it concludes that the projected transaction, in the case it was carried out, should be considered as a swap and not a purchase and sale. Since the cryptocurrency is not money, it should be considered as an intangible asset, to be exchanged for a real estate asset.

Upcoming bills

Finally, as mentioned above, on 3 August 2021 the first Bill was submitted to the Uruguay Congress which seeks to regulate the production and commercialisation of virtual assets. This would apply to all individuals and legal entities located in Uruguay, public or private,. The Bill seeks to validate and legalise the virtual assets industry by creating a legal framework to protect consumers and virtual asset providers.

On 1 October 2021, the Partido Colorado introduced in Parliament a new Bill seeking to create a minimum legal framework whereby the CBU is vested with the powers to regulate crypto assets in their various forms, including cryptocurrencies and crypto tokens, respecting the principles provided for in the Bill. It is established that cryptocurrencies may be accepted in the performance of private contractual obligations freely entered into by the parties as a payment method, provided that they are used for no other purpose than to serve as such and subject to the applicable regulations on means of payment and legal tender.

These two Bills are currently under study by Congress. A lengthy process lies ahead; despite the fact that we cannot confirm whether the normal process will continue until it is approved, the crypto assets discussion has certainly been installed in the official agenda.


The phenomenon of virtual asset activities has generated an impact in Uruguay, opening a debate as to whether they should be regulated in the society and by the political system. Currently, operating with virtual assets is considered a legal activity in Uruguay, but it should be noted that they are not considered as money. Therefore, users and companies will be able to carry out transactions with virtual assets, but they should bear in mind that such activities could fall under the scope of the CBU licence regulations and AML regulations.

For now, the discussion on virtual assets has settled in Uruguay and the next steps of the political system and the CBU will have to be followed closely to determine any possible regulation.

[1]Comunicado del BCU sobre activos virtuales’ (Central Bank of Uruguay, 1 October 2021), see www.bcu.gub.uy/Paginas/Detalle-Noticia.aspx?noticia=72&vista=Home.

[2] Consultation No 6.419 (Dirección General Impositiva, 12 August 2021) see https://www.impo.com.uy/bases/consultas-tributarias/6419-2021.