TerraLex Cross-Border Guide to Crypto Assets

Uruguay does not have any specific legal definition in place of crypto assets. However, please note that the Draft Bill (as defined in Question 3) set forth a crypto assets classification, including the following definitions:

1. Securities Virtual Assets: Those virtual assets that may grant rights such as property right, credit right, or future profits right. For instance, a debt security.
2. Utility Virtual Assets: Those virtual assets that may be exchanged to obtain a specific product or service, which is usually carried out through distributed ledger technologies (DLT) or similar. An example of utility virtual assets are those which represent a voting right (such us fan tokens).
3. Stable Virtual Assets: A specific category of virtual assets designed to minimize volatility in its value. Stable VAs aim to maintain a stable value, relative to a fiat currency. In this category of VAs, the holder obtains rights over the reserve assets that back up the issuance (should they exist), whereas the issuer pledges to carry out the conversion at the user’s request. Within this category, there are stable virtual assets backed by assets, and algorithmic stable virtual assets.
4. Exchangeable Virtual Assets: These virtual assets do not grant any kind of rights such us the security, utility, or stable virtual assets, but are used as means of trade or invest. For instance, the Bitcoin, Ethereum, Ripple, etc.

Uruguay does not have any specific legal framework in force regarding crypto assets. Currently, crypto assets are not considered as legal tender currency. Pursuant to Section 26 of Law 16.696 (1995), only the bills and coins issued by the Central Bank of Uruguay (“CBU”) shall be considered as legal tender currency within limits of Uruguayan territory. So far, the CBU has confirmed that crypto assets are not legal tender currency in Uruguay and considered the crypto assets as a digital representation of a security or contractual right that can be stored, transferred, and traded by electronic means through distributed ledger technologies.

Consequently, the issuance and trading of crypto assets are not subject to any specific regulation and does not fall within the scope of the CBU´s regulations (even though, please note that crypto assets service providers may by subject to other licenses or authorizations of the CBU).

No, crypto assets are not specifically regulated in Uruguay. However, it must be emphasized that on May 4, 2022, the CBU´s Board of Directors passed and submitted before the Ministry of Economy and Finance a draft bill seeking to regulate the crypto assets, creating a legal framework including, among others, the following: (i) regulation and oversight rights of the CBU in connection with financial crypto assets service providers, (ii) regulation of crypto assets in the capital markets, (iii) AML (the “Draft Bill”).

As stated in Question 5, crypto assets are not specifically regulated in Uruguay. However, the Bill Draft provides that the CBU shall be the local authority entitled to regulate and oversee the financial crypto assets service providers, crypto assets public offerings, and control of AML and KYC regarding financial crypto assets activities.

No specific AML measures have been introduced in relation to crypto assets activities. Notwithstanding the above, pursuant to the Bill Draft, anybody that operates with crypto assets in Uruguay will be subject to the CBU´s control on AML, whether or not they are part of the Uruguayan financial system.

So far, the use of blockchain is not subject to any specific regulation in Uruguay.

Uruguay does not hay a specific taxation regime for crypto assets. However, the Tax Authority (“Dirección General Impositiva”) answered to a binding consultation regarding a crypto assets real estate transaction and stated two relevant conclusions: (i) that crypto assets are not legal tender currency in Uruguay; and (ii) that crypto assets shall be considered as a movable intangible asset (Binding Consultation No. 6419 dated August 12th, 2021).

Considering the above, the Tax Authority concluded that the projected crypto asset transaction was not a sale-purchase agreement, but a swap transaction (since it involved the exchange of crypto assets - not considered as legal tender currency - and a real estate asset).

According to Uruguayan legal types of property, crypto assets shall be considered, as a general rule, as movable intangible assets.

Uruguay does not have a specific regulation on conflicts of law with other jurisdictions regarding crypto assets. As a general rule, pursuant to General Law on Private International Law No. 19.920 (2020), assets shall be governed in terms of property relationships by the law of the country where they are located. In this brief history of crypto assets, there is no case law regarding the application of such statute to this kind of assets.

As a general rule, yes, smart contracts transferring ownership on a crypto asset should be treated as legally binding in Uruguay. In this brief history of crypto assets, there is no case law regarding the enforceability of these agreements.

From a theoretical point of view, there are no legal obstacles to take a security over a crypto asset in Uruguay. Considering that crypto assets shall be considered as movable intangible assets, a creditor could potentially take a charge over a debtor´s crypto assets itself. This may enable the creditor to enforce the security in case an event of default occurs. However, from a practical perspective, there may be material risks involved in a crypto assets guarantee; mainly because of the difficulties to liquidate it easily (the creditors depend on a third party´s willingness to get the secured crypto asset in exchange for cash or another asset) and reduced control of the creditor over the secured crypto asset. In Uruguay, there is still no case law regarding the enforceability of these type of guarantees.

Since 1974 there is no inheritance tax in Uruguay.

Yes. Please refer to the Draft Bill description in Question 3.

To our knowledge, there is no supranational view on crypto assets in the region.

From a global perspective, the regulatory and technological landscape is shifting rapidly; therefore, the above answers may vary or change in the short term.