Crypto-funded debit card in Ecuador

Superintendencia de Compañías, Valores y Seguros (SCVS): The superintendency responsible for regulating companies, securities, and insurance. This body would classify tokens as securities.

Banco Central del Ecuador (BCE): The Central Bank, which has historically taken a very strict stance against cryptocurrencies being used as means of payment.

Payment Tokens / Cryptocurrencies (e.g., Bitcoin, Ethereum): These are generally not considered "securities" in the traditional sense, but their use as legal tender or alternative currency is explicitly prohibited by the Banco Central del Ecuador. Financial institutions are barred from facilitating transactions with them. This prohibition makes their status in Ecuador highly problematic, regardless of whether they are securities.

Stablecoins: While the SCVS focuses on securities, it's worth noting that the BCE would likely view any stablecoin as problematic if it attempts to function as a means of payment, especially if it is not backed by the USD or if its backing is not transparent and regulated by Ecuadorian authorities.

Security Tokens: These are explicitly designed to represent traditional securities such as shares, bonds, or interests in a fund. They confer rights like dividends, voting rights, profit sharing, or a claim on assets.

Investment Tokens: Tokens that are primarily sold to raise capital for a project or company, where purchasers expect a return on their investment due to the efforts of the issuer or a third party. This includes tokens that grant a share of future revenues, profits, or are marketed with promises of appreciation based on the success of a venture.

Unidad de Análisis Financiero y Económico (UAFE) - The Financial and Economic Analysis Unit.

Ley Orgánica de Prevención, Detección y Erradicación del Delito de Lavado de Activos y Financiamiento de Delitos (Organic Law for the Prevention, Detection, and Eradication of the Crime of Money Laundering and Financing of Crimes)

Resolución No. UAFE-DG-2022-0001 (Resolution No. UAFE-DG-2022-0001)

Identification and Verification of Customer Identity:

Beneficial Ownership (BO) Identification:

Purpose and Intended Nature of the Business Relationship:

Continuously monitor customer transactions and activities to ensure they are consistent with the VASP's knowledge of the customer, their business, and risk profile.

Develop and implement a risk assessment framework to identify, assess, and mitigate ML/TF risks.

Apply enhanced due diligence (EDD) for higher-risk customers (e.g., Politically Exposed Persons - PEPs, customers from high-risk jurisdictions, complex or unusually large transactions, new technologies and products that favor anonymity).

Reporting Obligation: Any transaction, attempted transaction, or activity that raises suspicion of money laundering or terrorist financing, regardless of the amount, must be reported.

No Tipping-Off: VASPs and their employees are prohibited from disclosing to the customer or any third party that a report has been or will be submitted to UAFE.

Internal Policies: VASPs must have internal policies and procedures to identify, evaluate, and report suspicious transactions.

Transaction Records: All details of virtual asset transactions (e.g., amount, type of virtual asset, sender/recipient addresses, timestamps, fiat currency equivalents, transaction hashes).

Not Classified as E-money/Payment Tokens/Securities (for private stablecoins seeking to function as currency): Ecuador's legal framework, particularly Resolution No. 001-2014-M issued by the then Monetary and Financial Policy and Regulation Board (Junta de Política y Regulación Monetaria y Financiera - JPRF), explicitly states that cryptocurrencies (including by implication stablecoins that aim to serve a monetary function) are not legal tender and are prohibited from being issued, regulated, or operated as a means of payment within the national financial system.

Resolución No. 001-2014-M de la Junta de Política y Regulación Monetaria y Financiera (JPRF), Article 1, Paragraph 2 states: "Queda prohibida la emisión, regulación y operación de monedas virtuales o criptomonedas, cuyo fin sea la intermediación financiera o la realización de pagos, a través del sistema monetario y financiero nacional. El Banco Central del Ecuador es el único que puede emitir dinero y medios de pago para la circulación en el país."

Prohibited for Private Issuers: No licensing regime exists for private stablecoin issuers because their issuance and operation as a means of payment are prohibited. Only the Banco Central del Ecuador has the authority to issue money and payment instruments. Any entity attempting to issue a stablecoin for use within Ecuador's financial system would likely be in violation of the Código Monetario y Financiero (CMF) and the aforementioned JPRF Resolution.

Código Monetario y Financiero (CMF): This comprehensive law governs the monetary and financial system. Articles related to the BCE's exclusive right to issue money and regulate the financial system underpin the prohibition.

Taxable Events: Any gain derived from cryptocurrency is likely to be considered taxable income. This includes:

Individuals (Personas Naturales): Profits are added to other taxable income and subject to progressive income tax rates. These rates vary annually and are published by the SRI.

Businesses (Sociedades): Corporate profits, including those from cryptocurrency activities, are subject to the standard corporate income tax rate, which is generally 25% for most companies, though certain circumstances (e.g., reinvestment) can lead to reduced rates.

Goods/Services Paid with Crypto: If cryptocurrency is used as a means of payment for actual goods or services, then the underlying good or service itself will be subject to the standard VAT rate of 12% (or exempt if applicable), just as if it were paid with fiat currency. The value for VAT purposes would be the fair market value of the crypto at the time of the transaction.

Servicio de Rentas Internas (SRI) - Official Tax Authority:

Legal Basis: Resolution 014-2014-M (or its subsequent reiterations) issued by the Monetary and Financial Policy and Regulation Board (Junta de Política y Regulación Monetaria y Financiera) and implemented by the Central Bank of Ecuador (BCE). This resolution, dated July 28, 2014, effectively banned private cryptocurrencies, stating that they are not recognized as legal tender and cannot be used as a means of payment within the country.