Andorra establishes regulatory framework in act for cryptos

The Digital Assets Act does not include proposals to make cryptos legal tender

Flag of Andorra                                 
Andorra has approved the Digital Assets Act to provide a regulatory framework for cryptos and blockchain technology – Photo: Getty Images
                                

Andorra, the independent principality on the border between France and Spain in the Pyrenees, has approved a Digital Assets Act that provides a regulatory framework for cryptos and blockchain technology.

The act, as reported by Cointelegraph, is split into two parts. The first part identifies the creation of cryptos, or as the act calls them “programmable digital sovereign money”, that can be exchanged in a closed system. Doing this, it is thought, would allow Andorra to create its own token.

The second part of the act refers to cryptos as financial instruments, which is intended to create an environment where blockchain and distributed ledger technologies can be regulated.

A CEO of a local Andorran Bitcoin (BTC) business, 21Million, told Cointelegraph: “The outcome they’re trying to achieve is to attract new businesses to locate in the country by offering some legal clarification making it easier and more transparent. They see this as a way to attract talent and entrepreneurs to the new economy.”

However, the Digital Assets Act does not include proposals for making cryptos legal tender in Andorra, as is the case with BTC in El Salvador. Although Andorra is not part of the European Union (EU), it has a monetary agreement with the EU making the euro Andorra’s official currency. 

CEO calls for Bitcoin adoption

The CEO, who only identified himself as Paul to Cointelegraph, has argued for BTC adoption in Andorra, particularly in relation to it being used as a reserve asset for the country. 

In a blog post, he said it is risky to store gold in Andorra because the landlocked country has no standing army to protect any such reserves or its financial institutions.

In addition, there is no national airport and any gold reserves would have to be transported using either of the two roads connecting Andorra to its neighbours. 

“Andorra therefore needs a reserve asset that is liquid throughout the globe, easy to protect and easy to store. And bitcoin is exactly that.” said the CEO. 

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