Ecuador Warns Against Crypto Use Amid 7% Transaction Fee Reduction Push

Ecuador, a country that has been fully dollarized since the 1999 financial crisis, treats any rival monetary instrument with caution. The Central Bank (BCE) and the Monetary Policy and Regulation Board (JPRM) allow citizens to buy or sell digital assets online but repeatedly stress that crypto “is not legal tender, nor an authorized means of payment,” and warn of speculative risks. The historical context of Ecuador's monetary policy includes the adoption of the US dollar as the official currency in 1999-2000 due to hyperinflation and the collapse of banks. In 2014–2018, the BCE introduced Sistema de Dinero Electrónico, the first state-owned mobile money in the world, which was closed due to low usage. In January 2018, the BCE made it clear that it is legal to trade with crypto, but tokens cannot be used to pay for goods or services. In February 2022 and August 2023, the JPRM reaffirmed the exclusivity of the dollar and enumerated the authorized e-payment instruments, with crypto not on the list. In August 2024, the BCE again warned publicly and stated that violators can be referred to prosecutors under Article 98 of the Monetary Code. Despite these restrictions, Chainalysis considers Ecuador as the eighth Latin American country by the on-chain value received (~ USD 7 billion) due to the increase in grassroots adoption.

The regulatory framework in Ecuador involves four bodies sharing oversight. The BCE establishes monetary policy, provides crypto warnings, and may test a Central Bank Digital Currency (CBDC). The JPRM specifies which money is considered a legal tender or an authorized way to pay, with its resolutions of 2022 and 2023 explicitly excluding cryptocurrencies. The Superintendency of Banks (SB) does not allow crypto-related transfers within the formal banking system and has a list of unauthorized parties in the open. Realized crypto gains are taxed by the Internal Revenue Service (SRI) as Ecuador-source income and progressively at up to 35% on individuals or 25% on firms. FinTech service providers must incorporate locally as sociedades anónimas, post at least USD 200,000 in capital, carry liability insurance, and obtain a special registration before offering any tech-based financial service—requirements formalized in early 2025.

Ecuador's crypto policies are clear: only the US dollar is considered legal tender, and Article 94 of the Monetary Code bars any alternative, so invoices, salaries, and taxes must be denominated in USD. Banks, insurers, and payment processors must refuse crypto transactions unless a future law grants an explicit license. Card acquirers routinely flag exchanges as high-risk. Private residents may buy, hold, or P2P-swap tokens on global platforms such as Binance, OKX, or Mercado Bitcoin. The BCE concedes it has “no power to ban” these trades but gives no consumer protection. Mining is not expressly prohibited, yet high electricity tariffs, Andean grid outages, and import duties keep large-scale farms away; most rigs are hobby-sized in Quito’s suburbs or the coastal lowlands. No domestic exchange is licensed, and local entrepreneurs route order flow through offshore APIs or Telegram OTC desks, settling in USD cash or stablecoins. Talk persists of a retail CBDC pegged 1:1 to the dollar to modernize small payments without diluting dollarization, but no launch date is confirmed.

Crypto innovation in Ecuador focuses on mobile-first and low-cost remittance rails. Start-ups develop USDT or CELO payments sent via WhatsApp bots and converted into dollars at corner tiendas, which are already used to cash-in/cash-out phone top-ups. Agritech dairy producer El OrdeO incorporates IBM Food Trust to monitor cold-chain integrity of milk products through the farm to the shelf. Humanitarian actors are also trying this approach: CARE Ecuador, supported by the Celo Foundation, is testing crypto vouchers through Umoja Labs to enable 10,000 refugee women to pay doctors without having a bank account.

Challenges and issues in Ecuador's crypto landscape include regulatory opacity, with a clash of mandates between BCE, JPRM, and SB causing stalling of the process of integration of the banks and venture financing risk-taking. The widespread application of stablecoins could threaten the management of the balance of payments and destabilize anti-laundering enforcers, according to government officials. The history of failed e-money projects has left a significant number of citizens suspicious of any new digital money issued by the government. Infrastructural loopholes, such as low internet penetration in rural areas and frequent power failures, adversely impact node uptime and retailing acceptance terminals. Additionally, there is no deposit insurance or apparent dispute-resolution channel, and phishing schemes and Ponzi tokens are thriving on social media platforms like Facebook and TikTok.

Important regulatory trends and prospects in Ecuador include the implementation of the FinTech Law, which mandates FinTechs to have a minimum paid-in capital of USD 200,000, have a risk structure approved by the SB, and submit quarterly reports on cybersecurity. The FinTech framework has a draft chapter that would establish a registry of virtual-asset service providers, requiring exchanges to segregate client funds and provide wallet analytics to the Financial Intelligence Unit. The BCE technical units have simulated a tokenized dollar that clears immediately on a private quorum chain; a trial launch is possible in 2026 as soon as legislative approval and vendor selection fall into line. Start-ups are advocating a regulatory sandbox to pilot USDT-based transfer of funds between Spain and the United States, with a 7% transaction fee reduction to below 3%. Triple-A estimates that 480,000 Ecuadorians (2.73% of the population) have already purchased crypto, a number that is expected to grow exponentially when the all-important compliant on-ramps emerge.

Ecuador’s policy stance is firm—crypto cannot rival the dollar in daily commerce—yet market demand for faster, cheaper cross-border payments pushes adoption steadily upward. A balanced Virtual Asset Service Provider (VASP) licensing system, paired with a dollar-backed CBDC, could channel this momentum into supervised rails, enhance financial inclusion, and preserve dollar stability. Continued ambiguity, by contrast, will keep innovation in the shadows and erode consumer safety.