In a decisive move to strengthen financial oversight and combat illicit activities in the digital asset space, the President of Peru has issued a new executive decree mandating that all cryptocurrency exchanges operating within the country comply with anti-money laundering (AML) regulations. This landmark legislation positions Peru as one of the more proactive Latin American nations in regulating virtual asset service providers (VASPs), aligning its national policies with international standards set by the Financial Action Task Force (FATF).
The updated legal framework requires all VASPs—including exchanges, custodians, and crypto-to-fiat platforms—to register and report transaction data to the Financial Intelligence Unit of Peru (UIF-Peru). As the central authority responsible for monitoring financial crimes, UIF-Peru will now have the power to analyze suspicious activities related to money laundering and terrorism financing involving digital assets.
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Defining Virtual Asset Service Providers Under Peruvian Law
Under the new decree, a "Virtual Asset Service Provider" is broadly defined to include any individual or entity engaged in one or more of the following activities:
- Exchanging virtual assets for fiat currency (and vice versa)
- Swapping one form of cryptocurrency for another
- Transferring virtual assets on behalf of clients
- Providing custody or administration services for digital wallets
- Offering financial services tied to the issuance or sale of virtual assets
This comprehensive definition ensures that not only centralized exchanges but also emerging DeFi platforms and wallet providers may fall under regulatory scrutiny if they operate within Peruvian jurisdiction or serve Peruvian users at scale.
By formally classifying these entities as regulated financial intermediaries, the government aims to close loopholes that could otherwise be exploited for anonymous transactions and cross-border fund movements without oversight.
Alignment with FATF Recommendations and the Travel Rule
A key objective of the new law is to bring Peru’s regulatory approach in line with FATF Recommendation 16, commonly known as the "Travel Rule." This rule mandates that VASPs must collect and share identifiable information about both the sender and recipient during cryptocurrency transfers—similar to traditional wire transfer requirements.
Implementing the Travel Rule means that when a user sends crypto from a Peruvian exchange to an overseas wallet, the sending platform must verify and transmit:
- Full name
- Account number or wallet address
- Physical address or date of birth
- National identification number (where applicable)
This data must be securely stored and made available to UIF-Peru upon request. While full technical compliance—especially with decentralized protocols—remains a challenge, the regulation sets a clear expectation: transparency over anonymity in financial transactions.
Regulatory Timeline and Next Steps
Although the decree is now officially in effect, detailed implementation guidelines are expected to be published by UIF-Peru within the coming weeks. These upcoming directives will likely specify:
- Registration procedures for VASPs
- Minimum KYC (Know Your Customer) requirements
- Thresholds for reporting large or suspicious transactions
- Cybersecurity and data protection standards
- Audit and compliance obligations
Regulated entities will likely be given a transition period to adapt their systems before enforcement actions begin. However, non-compliance after the grace period could result in fines, operational restrictions, or even license revocation.
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Why This Matters: Balancing Innovation and Security
Peru’s move reflects a growing global consensus: while blockchain technology fosters financial inclusion and innovation, it must not become a haven for criminal activity. With rising concerns over ransomware payments, darknet markets, and illicit cross-border flows, governments are under pressure to establish clear guardrails.
For legitimate crypto businesses, this regulation offers long-term benefits:
- Increased trust from institutional investors
- Greater access to traditional banking services
- Legal clarity that supports sustainable growth
However, challenges remain—particularly for smaller startups that may lack the resources to implement robust compliance infrastructure. The success of this initiative will depend heavily on collaboration between regulators, tech developers, and industry stakeholders.
Regional Context: Latin America’s Evolving Crypto Landscape
Peru joins a growing list of Latin American countries establishing formal crypto regulations. Neighbors like Brazil and Mexico have already implemented AML frameworks for VASPs, while Argentina and Chile are advancing similar proposals.
This regional trend suggests a shift from crypto tolerance to structured oversight—a necessary evolution as digital asset adoption continues to rise across Latin America. According to Chainalysis, peer-to-peer (P2P) crypto transaction volumes in the region grew by over 40% year-over-year in 2024, driven by remittances, inflation hedging, and unbanked populations seeking alternative financial tools.
Peru’s new law signals that innovation can coexist with accountability—if guided by sound policy.
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Frequently Asked Questions (FAQ)
Q: Does this law apply only to centralized crypto exchanges?
A: No. The regulation covers all virtual asset service providers, including decentralized platforms that facilitate exchanges or transfers for Peruvian users, depending on their level of interaction and control.
Q: What is the “Travel Rule” and why is it important?
A: The Travel Rule requires crypto exchanges to collect and share sender and recipient information during transactions—just like banks do with wire transfers. It enhances traceability and helps prevent money laundering.
Q: Are individuals who hold or trade crypto personally affected by this law?
A: Not directly. The law targets service providers rather than private users. However, individuals using regulated platforms will need to complete KYC verification to continue trading.
Q: Will this slow down crypto adoption in Peru?
A: In the short term, some friction may occur during compliance adjustments. But in the long run, clearer regulations often boost confidence and attract more users and investment into the ecosystem.
Q: How does this compare to U.S. or EU crypto regulations?
A: Peru’s approach mirrors core elements of U.S. FinCEN rules and the EU’s MiCA framework—particularly around AML/KYC and VASP licensing—though it is currently less detailed in scope.
Q: When do crypto companies need to comply?
A: The law is effective immediately, but specific compliance deadlines will be outlined in forthcoming guidelines from UIF-Peru, expected within weeks.
This regulatory development marks a pivotal moment for Peru’s digital economy. By embracing international standards while fostering responsible innovation, the country is laying the foundation for a safer, more transparent crypto ecosystem—one that protects citizens without stifling progress.