Colombia’s Bank Ban on Crypto Transactions: What It Means in 2025

In 2022 the Financial Superintendency of Colombia (Financial Superintendency of Colombia (SFC) a regulator that oversees banks, insurance firms and other financial entities) issued a sweeping prohibition that stops every supervised bank from touching cryptoassets in any form. The rule blocks custody, investment products and even the use of bank platforms for crypto transactions. For anyone living in or doing business with Colombia, the ban reshapes how digital money moves, where compliance costs pile up, and which players can still operate in the space.

Key Takeaways

• The SFC ban bars all Colombian banks from holding, investing in, or facilitating any crypto transaction.
• Payments above US$150 must be reported to the Financial Information and Analysis Unit (UIAF) with full sender‑and‑receiver details.
• Fintechs and PSPs bear heavy compliance burdens; fines for non‑compliance have topped US$1.5 million.
• Only a few banks, like Bancolombia, have found ways to launch crypto services (Wenia exchange, COPW stablecoin) within the regulatory limits.
• Regional peers are loosening rules - Brazil, Argentina and Chile have embraced custodians or tax frameworks - making Colombia’s stance a middle‑ground in Latin America.

What the Ban Actually Says

The July 2022 external circular spells out three core prohibitions for any institution supervised by the SFC:

1. Custody ban: Banks cannot hold cryptoassets on behalf of customers.
2. Investment ban: No crypto‑linked funds, ETFs or other investment vehicles may be offered.
3. Facilitation ban: Bank platforms - online banking, mobile apps, POS terminals - may not be used to process crypto payments or transfers.

Violating any of these triggers heavy sanctions, and the regulator expects banks to embed robust anti‑money‑laundering (AML) controls that specifically prevent crypto‑related illicit flows.

Reporting Requirements & Real‑Time Monitoring

Payment Service Providers (PSPs) and crypto exchanges must file Suspicious Transaction Reports (STRs) to the Financial Information and Analysis Unit (UIAF) whenever a crypto transaction exceeds US$150. The report must contain:

• Full name, ID number and address of the sender.
• Full name, ID number and address of the recipient.
• Timestamp, cryptocurrency type, amount in both crypto and USD.
• Reason for suspicion (e.g., structuring, rapid turnover, mismatch with declared income).

Exchanges are also required to push real‑time alerts for any flagged transaction, allowing UIAF to act instantly. The result is a near‑continuous audit trail that dramatically raises compliance costs for smaller fintechs.

Impact on Traditional Banks

Because the ban covers every “supervised financial institution,” major banks have had to rewrite internal policies, retrain staff, and disable any crypto‑related functionality in their digital channels. The ripple effect includes:

• Lost revenue: No crypto‑linked credit cards, no custodial fees, and no crypto‑fund distribution.
• Customer churn: Tech‑savvy users migrate to offshore platforms or peer‑to‑peer solutions.
• Operational overhaul: New AML systems, transaction‑screening engines, and reporting dashboards.

Despite these hurdles, Bancolombia launched the Wenia exchange in 2023 and issued the COPW stablecoin in 2024. They achieved this by structuring the services as separate legal entities outside the SFC‑supervised banking umbrella, while still leveraging the bank’s brand and liquidity.

How Fintechs and PSPs Are Coping

Fintech startups have turned to RegTech platforms that automate data capture, KYC and STR generation. A typical compliance stack now includes:

1. Identity verification API (biometrics + document scanning).
2. Blockchain analytics tool that flags high‑risk wallet addresses.
3. Automated UIAF reporting module that formats and sends STRs in real time.
4. Audit‑ready logging that stores every API call for six years, as required by the Superintendency of Companies.

Even with these tools, smaller players often face capital constraints. The average annual compliance spend for a mid‑size PSP in Colombia is roughly US$350,000, compared with under US$100,000 for similar firms in Chile, where no banking ban exists.

Regional Comparison: Where Does Colombia Stand?

The table shows that Colombia’s approach is stricter than most neighbors, yet it still permits private crypto exchanges and stablecoins that operate outside the traditional banking sphere.

Compliance Checklist for Colombian Financial Institutions

• Update internal policies to explicitly forbid custody, investment and facilitation of cryptoassets.
• Deploy AML systems that flag crypto‑related transaction patterns.
• Integrate UIAF reporting API for any transaction > US$150.
• Train compliance officers on the SFC circular and recent guidance.
• Conduct quarterly audits of all digital‑channel logs to ensure no crypto data slips through.
• Consider establishing a separate legal entity (outside SFC supervision) for any crypto‑related product.

Future Outlook: Will the Ban Stay?

Several signals suggest the current restrictions may soften:

1. Political will: Finance Minister Ricardo Bonilla has repeatedly said crypto is “a reality” and that regulation, not prohibition, is the goal.
2. Regional pressure: Neighboring countries are gaining competitive advantage by allowing banks to offer crypto services, pushing Colombian firms to lobby for change.
3. Regulatory sandbox interest: After the 2023 expiration, the SFC hinted at a new “innovation hub” that could accommodate stablecoin projects.
4. International recommendations: The IMF has urged Colombia to build a “clear, proportional framework” to avoid market fragmentation.

Analysts at Lightspark predict a phased amendment by 2027 that could lift the facilitation ban while keeping custody restrictions until a dedicated crypto‑custody law is enacted.

Bottom Line for Users and Businesses

If you’re a Colombian resident wanting to trade Bitcoin, you’ll still use offshore exchanges or peer‑to‑peer platforms-banks won’t help. Companies that need to move crypto‑funds must partner with licensed VASPs and ensure UIAF reporting is automated. Meanwhile, banks can explore separate subsidiaries to stay in the game, as Bancolombia has shown.