Digital Assets & Real Estate Transactions in Costa Rica

In an increasingly digital world, the way we perceive and interact with value is evolving. From cryptocurrencies and blockchain-based platforms, digital assets are reshaping many industries. However, digital assets are not regulated in all countries, and Costa Rica is one of them.

A cryptocurrency can be defined as an electronic accounting system that keeps track of transactions between people and thus the available purchasing capacity. This accounting system is decentralized. Therefore, it does not require a third party to validate accounting transactions. It has other characteristics, such as being accessed by virtual means, and uses blockchain technology for the registration and authentication of each transaction.

Some characteristics of cryptocurrencies allow them to be used primarily as a mechanism for storing value; but also as a medium of exchange, uses that are traditionally assigned to money issued by central banks.

In accordance with the Costa Rican regulations, and the Central Bank of Costa Rica, a currency, to be considered as such from a legal point, must comply with at least three characteristics:

• The currency must be issued by a central bank or the competent public authority
• The currency must have legal tender value, and therefore, its acceptance is mandatory in the place of issuance.
• The currency must have liberatory power, understood as the power to release debtors from payment obligations.

In accordance with the above, crypto currency is not considered a currency in Costa Rica. However, the possession of virtual assets, as well as their purchase or sale or exchange for goods and services, is governed under civil law with the respective treatment of movable property, as far as applicable, as well as with the customs and general principles of law, as long as it is developed within acts of commerce whose object is lawful, this makes the crypto currency not illegal as long as it is not used for ilegal purposes.

Why is crypto not accepted as a currency in Costa Rica?

Costa Rica currently lacks a system able to track any digital asset, and this is the main reason why crypto or money that was generated by cryptocurrency won´t be accepted. Also, the government´s possision and one of their strongest reasons for not using this type of currency is that in case of conflict, fraud or breach of contract, the consumer of crypto currencies may seek justice through court, and due to the impossibility of identifying the counterparty or to track the transactions, there are procedural obstacles to bringing a legal action and determination of the competent judicial authority to carry out the process. In summary:

Bitcoin as a Medium of Exchange: Bitcoin and other cryptocurrencies can be used as a means of payment between parties who voluntarily agree to transact with them. However, they are not recognized as an official currency or legal tender like the Costa Rican colón or the United States dollar.

No Comprehensive Regulation: Costa Rica does not have a specific legal framework governing cryptocurrencies. The government and regulatory bodies, such as the Central Bank of Costa Rica (Banco Central de Costa Rica), have issued guidance clarifying that cryptocurrencies are not backed by the state or guaranteed in any way.

Freedom of Contract: Costa Rica’s legal framework emphasizes the freedom of parties to contract. This means that individuals or businesses can agree to use Bitcoin or other cryptocurrencies for payments or transactions if both parties consent.

In conclusion, while cryptocurrencies are not illegal in Costa Rica, they are not considered of legal tender and currently operate in a legal grey area. The Central Bank of Costa Rica reminds the public that if they decide to make use of assets identified as cryptocurrencies, they do so at their own risk.

Crypto is a useful asset nowadays, and people have generated profit through it, and Quatro understands the need of clients wanting to use this currency for real estate transactions, so we have good news! Digital assests are not illegal, and as long as certain conditions are met you can use cryptocurrency for real estate transactions and we can provide legal guidance to invest in real estate through these means.

If you found this information useful or need further guidance, reach out to Maria Fernanda Baudrit at mbp@quatro.legal

Disclaimer: The information provided in this blog post is for general informational purposes only and is not intended to constitute legal advice. While we strive to ensure the accuracy and timeliness of the content, laws and regulations are subject to change. For the most accurate and up-to-date information, please contact our office directly. Some images may be AI generated.