Colombia’s Ministry of Finance will now regulate crowdfunding
Since its creation, the Internet has become a game-changer. It has become the way we communicate, the way we meet and interact with people, and more recently, an avenue for young companies to raise capital. In fact, the change that the Internet and technology has had on entrepreneurship is profound.
Enter crowdfunding, an avenue by which entrepreneurs can use the various Internet platforms to promote their product ideas and raise the capital that they need to bootstrap their businesses. Companies such as Kickstarter and Indiegogo have helped entrepreneurs raise hundreds of millions of dollars, sometime very quickly.
However according to the director of the Financial Regulation Unit of Colombia’s Ministry of Finance, David Salamanca, crowdfunding is illegal in Colombia, and Salamanca wants entrepreneurs to beware.
Salamanca stated that crowdfunding does not fit into Colombia’s regulatory framework because it is illegal to collect money from public resources. According to Colombian law, only the country’s Superintendencia Financiera can collect money from the public. That organism, which also supervises banks and investment operations, is used to ensure that funds in the country are not used for money laundering or to finance terrorist organizations.
Nonetheless, Salamanca indicated that the legal framework to supervise and allow crowdfunding is being created. One drawback to the new legislation, however, is that it will limit the amount of funding that a project can receive. The objective of the law reform is to provide the Colombian government with greater control over who sends and receives this money, as well as to limit its practice to platforms endorsed by the Superintendencia Financiera.
The Ministry of Finance is expected to present the new law for consideration within the next two weeks.