Following the shutdown of three Chilean cryptocurrency exchanges by banks Itau Corbanca, Bank of Nova Scotia and the state-owned Banco del Estado de Chile, the exchanges have taken their grievances to the appeals court in an attempt to overturn the decision.
Chile’s largest exchanges, Buda.com, Crypto Market (Crypto MKT), and Orionx are currently blocked from using the banks. Banco del Estado de Chile stated at the time of its decision that it would “not operate with companies that are dedicated to the insurance or creation, brokerage, intermediation or serve as a platform for the so-called cryptocurrencies”.
Before the shutout, Buda facilitated approximately USD 1 million worth of cryptocurrency trades daily. The lawyer representing the exchanges commented that the decision was “an abusive exploitation of a situation of economic independence”.
Although little reason has been offered by the banks, there is a general feeling that the blockade may have originated from the government after Chile’s Financial Stability Council (Consejo de Estabilidad Financiera, CEF) warned of risks pertaining to the use of cryptocurrencies earlier this month.
The appeals court has agreed the hear the exchanged out, although their bank accounts remain closed. According to Bloomberg, Chile’s financial institutions are currently attempting to put a blanket ban on the cryptocurrency industry.
Both BUDA and Crypto MKT issued a public statement titled ‘Chile Can Make A Fool Of Itself Or Stand Out Worldwide’, asking for a transparent stance on cryptocurrencies. They argue that banks in Chile have been shutting down crypto exchange accounts with instructions “not to open an account for anyone” with a connection to cryptocurrencies. The statement argues:
“Due to the lack of knowledge and clarity some banks, out of fear, lack of information, or even poor strategy, are refusing or not offering services to people who are in the cryptocurrency market.”
Guillermo Torrealba, Buda’s chief executive officer, was quoted as saying, “They’re killing an entire industry. It won’t be possible to buy and sell crypto in a safe business in Chile. We’ll have to go back five years and trade in person. It seems very arbitrary.”
The moves by state-owned Banco del Estado de Chile seem to conflict with a recent statement by Susana Jimenez, Chilean minister of energy, announcing that the country’s National Energy Commission would start using blockchain, the technology behind virtual currencies, in its energy sector data.
Despite the relatively small amount of business compared to some of the world’s biggest exchanges which trade up to USD 2 billion worth of cryptocurrency a day, the market in Chile continues to be buoyant.