Central Bank of the Dominican Republic: cryptocurrencies are not legal tender

The Central Bank of the Dominican Republic (BCRD) communicated this week that the cryptocurrencies that are circulating in that country, under images of the patriotic symbols, are not backed by the institution nor authorized for their issuance. In this way, they emphasize their distance from the market.

In a statement, the issuing entity warned Dominicans of “the different modalities of cryptocurrencies, coins and virtual assets that have been being promoted in digital media in the country, among them, allusive to patriotic symbols… do not have the backing of this institution”.

Nor, they argue, are they authorized as a means of payment or transactions of any kind. “That is to say, they are not legal tender nor do they have the force to discharge public or private obligations throughout the national territory”.

So far, it is not known which coins they are exactly, and therefore, it cannot be stated that they also refer to BTC. To clarify, CryptoNews contacted the BCRD and is awaiting comments.

A long-standing distant stance
The Central Bank’s stance is not new. It was already one of rejection, but to a certain extent, as despite misgivings, they have always allowed locals to use cryptocurrencies at their own risk.

It was June 27, 2017 when the Bank issued a statement on the use of virtual currencies. There, after admitting that they have observed the evolution of bitcoin, litecoin and ethereum, in addition to the appearance of them in the Dominican market, they warned the entire financial system in general about “the risks associated with the acquisition of this type of virtual assets with the intention of using them as an investment or as a means of payment.”

The Bank clarified in that none of the aforementioned assets are backed and, therefore, “do not enjoy the legal protection granted by the legal framework of the Dominican Republic”. At present, it points out:

Likewise, they cannot be considered as foreign currencies under the exchange regime, since they are not issued or under the control of any other foreign central bank, reason for which they do not receive the guarantees or security offered by exchange intermediation, nor the free convertibility enshrined in Articles 28 and 29 of the Monetary and Financial Law.

Central Bank of the Dominican Republic (BCRD).
They insisted that the aforementioned assets nor any other “are legal tender and therefore do not enjoy the backing of the State, their effectiveness or their use as a means of payment in our economy cannot be guaranteed, nor is any person under any obligation to accept them as a form of payment for goods or services rendered.”

“With this clarification we want to avoid confusion among users of the financial system and citizens in general, about any operation intended to be carried out using this scheme,” they said.

The Bank warned of the different modalities of cryptocurrencies, allusive to patriotic symbols that are circulating / Source: BCRD.
In reference to the regulated institutions of the financial system, they clarified, “they are not authorized to use or carry out operations with them within the Payments System of the Dominican Republic”, and if they become involved in the commercialization or use of such assets, “they could be sanctioned under the provisions of the Monetary and Financial Law, regarding participation in prohibited operations”.

Thus, they conclude by indicating that the BCRD, as the issuing entity, complies with alerting those who use cryptocurrencies, that they would be “incurring in operations not contemplated by the banking regulations in force nor in the payment mechanisms authorized by the Monetary Board”.

Although, they expose, each Dominican may, “at his or her sole risk”, use, trade and accept these assets as means of payment.

And they have done so. Even when the entity opposes and shows a position contrary to the ecosystem, the Dominican Republic has been one of the countries where the development of cryptocurrencies has grown steadily.

In June, in CryptoNews we reported that this Caribbean country continued to multiply the number of cryptocurrency ATM services in the Caribbean island, surpassing the mark of Bitcoin ATMs available in a Latin American country, after the installation of the fourth device in the capital, Santo Domingo.

Not enough, multiple ways to buy and sell bitcoin in the Dominican Republic have been developed, such as P2P platforms like LocalBitcoins and Paxful, whose trading volume in the last year exceeds USD 6 million and USD 5 million, respectively, as described in our guide.

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