Chilean Crypto Exchanges Win Case Challenging Closure of Bank Accounts
Chile’s cryptocurrency exchanges have been granted victory in their case against banks. The Chilean anti-monopoly court has ordered two banks to reopen accounts belonging to Buda, just about a week after they were shuttered.
All the country’s banks stopped offering banking services to cryptocurrency exchanges over unclear reasons. The last one to deny its services was state owned Banco Estado. Corpbanca and Bank of Nova Scoti had also closed accounts belonging to cryptocurrency exchanges.
The action by the banks appeared coordinated coming days within each other and shortly after a warning from the Financial Stability Council against cryptocurrencies. The body includes representatives from the ministry of finance, pensions regulator among other government agencies.
The ban had threatened to kill the nascent cryptocurrency industry in Chile. Left with no banking services, exchanges like Buda have been considering their exit. Buda had a 24-hour volume of $1 million when its bank account was shut.
Buda CEO Guillermo Torrealba lamented the move to shut bank accounts as killing the entire industry.
Killing Entire Industry
“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.”
Torrealba had also complained the exchanges were being unfairly targeted despite abiding by all regulations governing financial institutions.
An association of banks called ABIF refused to intervene saying it was a matter of bank-client relationship.
Others like CryptoMKT had adopted a defiant stance saying they will find their own mechanism to make cryptocurrency transactions possible outside the banking system. It did not, however, go into details as to how this would be possible.
The small cryptocurrency community in the country had taken to social media to express their frustration over the move.
Under #ChileQuiereCryptos or Chile Wants Crypto, they termed the move retrogressive.
A similar scenario is also unfolding in India where banks have been asked to stop dealing with cryptocurrency businesses. The Reserve Bank of India has given regulated institutions less than three months to wind down such relationships.
A case challenging the move is in court. The RBI among other government entities have been directed to file a response.