Banco de la República on Blockchain in Colombia.

The growing demand for Blockchain in Colombia and cryptocurrency is leading to new endeavors and pilots in the country among young Colombians. This is spurred by the current fears in Colombian politics, economic failure to fully recover after the pandemic and a peso at risk of collapse. This has created the perfect environment to test new financial products and services to offer Colombians. The Banco de la República of Colombia is doing just that.
 
The IDB Group and Banco Davivienda have launched a bond pilot that will be issued, placed, traded and settled on blockchain technology. They will utilize the power of smart contracts to legitimize this to be placed on the Colombian stock market. This pilot will be the first of many steps towards the implementation of the technology in capital markets. Davivienda will issue the bond and IDB Invest will subscribe the entire issue. This is a big bid to help grow interest around Blockchain in Colombia and ignite the industry.
 
The benefits of this blockchain bond pilot include the potential for reduction of operating costs, optimization of processing times, greater traceability, elimination of misinformation and better financial risk management practice. This can all contribute to a more efficient and integrated securities market in Colombia without exposing the protections of investors.
 
The Banco de la República expects to act as an observer node in the blockchain network. They are participating in the experiment in order to better understand the process of issuing and trading securities in a decentralized manner with Blockchain in Colombia. They also want to better understand the effects on the primary and secondary market, including the challenges and regulatory needs to improve upon a blockchain-based bond, among other potential financial products in the future.
 
Davivienda has already become the first bank to apply advanced blockchain technology to guarantee the security, monitoring and transparency of its products and services. The bank has made significant investments in infrastructure, guaranteeing users a trustworthy, friendly and transformative experience. Davivienda is looking to set a benchmark for digital banking in the region and lead this path of integrating Blockchain in Colombia.
 
Colombia, and the entire Latin region, has a long way to go before they can call themselves a blockchain-based country, or even a technologically advanced nation. But despite the lack of proper infrastructure and government policy, that hasn’t stopped the surging growth in demand and the foreign investment that is pouring into Colombia to see these changes come to fruition.
 
Over the next 5-10 years, you will likely see regulators step back or introduce friendlier laws that encourage innovation around Blockchain in Colombia. Colombia has come a long way in the past 10 years already and there is much to be excited about in the years to come if the Colombian people keep pushing forward and the Banco de la República continues to favor the adoption of Blockchain in Colombia alongside similar technologies and various other financial institutions.

Brandon Zemp
CEO, BlockHash
Head of Operations, Blocolombia