Ecuador bans Bitcoin, seeks to create state-run currency

Friday 25 July 2014 13:46 CET | News

The National Assembly of Ecuador (NAE) has banned Bitcoin and decentralized digital currencies, while establishing guidelines for the creation of a new, state-run currency, reports.

As such, the law in question allows the government to make payments in e-money, but decentralized digital currencies are banned.

The proposed national digital currency is to be backed by the assets of the Banco Central del Ecuador. NAE will oversee the new currency while the central bank will develop and integrate it into the broader financial system.

The currency will operate in tandem with the USD and Ecuador’s official currency, although it is not certain what exchange rate will be established.

In an open letter from La Comunidad Bitcoin Ecuador, the country’s largest Bitcoin organization, members urged the legislature to allow for transparency and respect for the rights of consumers when creating a new digital currency.

As a result of the adoption of a national digital currency agenda, companies offering digital currency services will have to withdraw from operations or cease entirely, as the bill prohibits the “emission, production, initiation, falsifications, or any other type of [digital currency] simulation, and its circulation through any channel or way of representation” of non-sanctioned digital currencies, according to the news agency PanAm Post, cited by the same source.

The amendments laid out the legal framework for those who violate the ban, which establishes the power to confiscate Bitcoins or similar holdings. Those who operate businesses using prohibited digital currencies face the risk of prosecution as well.

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Keywords: Ecuador, Bitcoin, digital currency, crypto-currency, decentralized, online payments, virtual currency
Categories: Payments & Commerce
Countries: World
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