The budget law for the coming year, which was recently approved by Colombia’s representative chamber, includes a contentious provision that allows the state to seize a bank customer’s funds for budgetary purposes. These funds may be retrieved under certain legal circumstances if the account holders can prove their ownership.
The new budget law, which was approved last week by Colombian legislators in an express vote, includes a contentious provision that allows the government to seize a client’s funds that have been inactive in bank accounts for more than a year. The procedure is outlined in Article 81 of the aforementioned budget law. It reads:
The balances of the checking or savings accounts that have been inactive for a period of more than one year and do not exceed the value equivalent to 322 UVR ($24.40), will be transferred by the holding financial entities… in order to finance appropriations of the General Budget of the Nation.
However, if the account holder discovers that a request for these funds has been made, the authorities must reimburse the funds with the interest accumulated, just as if the funds were held in a depository financial institution. This budget law was approved in a hurry, according to many representatives and analysts, and it was not thoroughly analyzed.
Cryptocurrency as an Alternative
While the proposed article does not affect all account holders and may have a minor impact, it does spark a discussion about the power that the Colombia government and central banks have over the use of fiat money in the country. This could encourage the use of cryptocurrencies or other alternatives to traditional financial instruments as investment and savings tools.
Colombia is one of the Latin American countries that uses the most cash, and cryptocurrency companies must try to meet the needs of this market, which wants to exchange fiat cash money for cryptocurrencies. This is why the country already has 50 cryptocurrency ATMs aimed at these use cases, an unusually large number for a country not known for its cryptocurrency appeal.
It remains to be seen whether the government’s moves and the advancements of cryptocurrency companies in the country will result in a wave of adoption in the future.