Digital currencies including Bitcoin were banned in Colombia and the only valid currency allowed is the peso and the country’s central bank, Banco de la República is the only authority entitled to issue the money in Colombia.
The Colombian government on seeing the growing popularity of Bitcoin has decided to consider Bitcoin as the trading volume keeps growing regardless of the lack of legal framework in the country.
The investors in Bitcoin need to declare their earnings since it’s a high-risk investment. As an investment it is taxable. According to Attorney Juan Sebastián, People are required to report their cryptocurrency investment profits on their tax returns. People need to follow tax rules on assets since Bitcoins are a part of individuals' asset. He further claimed semi-anonymous nature of cryptocurrency allows people to evade paying taxes and has raised concerns among the tax authorities in other countries.
Despite the lack of regulations, implementation of tax rules over earnings generated through the sale of cryptocurrency is being planned by Financial Superintendence of Colombia.