Chile’s anti-monopoly court requested Banco del Estado de Chile and Itau Corpbanca, one of the country’s largest banks, to re-open the bank accounts of cryptocurrency exchange Buda less than a month after the bank abruptly terminated its services provided to cryptocurrency businesses.
Despite the increasing adoption of cryptocurrencies like bitcoin and Ethereum in South America led by Argentina and Brazil, the cryptocurrency industry of Chile has struggled to grow at a rapid pace over the past few years, primarily because of the uncertainty of policies around cryptocurrency businesses and investment.
The Chilean government has not released a formal statement to either legalize or restrict the usage of cryptocurrencies and as a result, apart from a handful of local companies, foreign companies have not expanded into Chile to provide services to local users.
This week, the Chilean court ordered Banco del Estado de Chile and Itau Corpbanca to resume banking services for local cryptocurrency trading platform Buda, and re-open the bank accounts of the cryptocurrency business, after the exchange filed a lawsuit against the bank for abruptly shutting down its bank accounts in early April.
On April 14, during an interview with Bloomberg, Buda’s co-founder and CEO Guillermo Torrealba condemned the actions of local banks including Banco del Estado de Chile and Itau Corpbanca for improperly closing the bank accounts of domestic cryptocurrency businesses. Torrealba said that local banks attempted to kill the entire cryptocurrency industry by restricting the ability of investors to purchase and sell cryptocurrencies.
“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.”
At the time, local media outlets speculated that the Chilean government and its central bank may have ordered banks to terminate its relationships with cryptocurrency businesses such as exchanges and payment service providers.
But, several analysts suggested that it was the bank’s independent action to target cryptocurrency firms, as they perceived the industry as immature with no regulations and policies set in place.
“Itau Corpbanca Chief Executive Officer Milton Maluhy said March 27 that the bank supports startups and new technologies, but cryptocurrency is an industry which still needs more regulation and the bank is following internal norms to decide on closing individual accounts,” Bloomberg reported.
In response to the statement of the bank’s CEO, Buda founder Torrealba said that the organization hopes the court to come to the appropriate decision to unfreeze the accounts of cryptocurrency businesses.
On April 26, the Chilean court ultimately ruled the case against Itau Corpbanca and sided with the cryptocurrency exchange which claimed the actions of the bank were unjustified.
What it Means for Chile’s Cryptocurrency Industry
The recent ruling of the Chilean court demonstrates cryptocurrency businesses, exchanges, and payment service providers can operate within the country without being in conflict with local banks and financial institutions. Moving forward, Chilean banks will not be permitted to abruptly shut down the bank accounts of cryptocurrency exchanges without a specific purpose or request from the government.