Based on Article 94 of the Organic Monetary and Financial Code (COMF), the Monetary Policy and Regulation Board (JPRM) issued Resolutions No. JPRM-2022-005-M, dated February 11, 2022, and No. JPRM-2023-015-M, dated August 9, 2023, which establish that the legal tender in the Republic of Ecuador is the United States dollar. Therefore, all transactions, monetary and financial operations, and their accounting records carried out in the country must be expressed in United States dollars.
Likewise, in accordance with Article 99 of the COMF, the JPRM approved Resolution No. JPRM-2023-014-M, dated August 7, 2023, which in its Article 1 classifies payment methods as: (i) Physical payment methods; (ii) Electronic payment methods; and (iii) Electronic Wallets. Additionally, this resolution, in Article 5, determined that electronic payment methods include: (i) Electronic money transfers for payments; (ii) Electronic money transfers for collections; (iii) Credit cards; (iv) Debit cards; and (v) Prepaid cards, whether rechargeable or not. Based on the cited regulations, cryptocurrencies are not legal tender in our country, nor are they an authorized electronic payment method at the national level.
In June 2024, the U.S. company Chainalysis published a study called “2023 Geography of Cryptocurrency Report,” which indicates that Latin America received approximately 7.3% of the total value of these digital assets worldwide between July 2022 and June 2023. According to this study, Ecuador ranks eighth in the region in terms of the value received in these assets, between June 2022 and July 2023, amounting to approximately USD 7 billion.
From the analysis of this report, it is important to mention that individuals residing in Ecuador could mainly use the following payment methods to acquire cryptocurrencies: cash, credit or debit card payments, and local transfers. In this context, if we analyze the evolution of transactions involving these means of payment, it can be ruled out that the acquisition of cryptocurrencies mentioned, for USD 7 billion, mainly occurred through cash payments or credit or debit cards. Otherwise, there would have been an unusual outflow of foreign currency from Ecuador and a decrease in the country’s International Reserves during the period analyzed in the study.
The JPRM and the Central Bank of Ecuador (BCE) remind individuals and legal entities that cryptocurrencies are not legal tender, nor an authorized means of payment in Ecuador. The use of methods of payment not authorized by the JPRM, or their full or partial simulation, is expressly prohibited in accordance with Article 98 of the COMF. The BCE, in the event of identifying the use of cryptocurrencies as a means of payment, will notify the Attorney General’s Office for the corresponding investigation and sanction.
Finally, we alert the public that trading cryptocurrencies could lead to significant losses due to their high volatility stemming from their speculative nature, as has been recently evidenced by the significant drops in their prices in international markets.
