"Chile Crypto Exchange: Round 3"
Updated: Jan 15, 2019
It seems the biggest enemies in the cryptocurrency world are governments and bank entities. This is not a problem that affects a particular country; I’ve read tons of news articles where governments are trying to ban the use of crypto others where banks are refusing to open accounts to crypto exchanges; and Chile is not an exception. Unfortunately, I believe these disputes only have a negative effect on the crypto side. Crypto exchanges need bank accounts; the negativities from government entities and banks get blast on media, giving people the wrong idea.
There is a serious battle going on in Chile between banks and crypto exchanges. In march of this year, several banks closed down many crypto exchanges accounts in Chile. According to some exchanges, the reasons behind the closure of there company accounts at first were very vaige but mainly pointing out the fact they were being closed because of the use of cryptocurrency.
To make matters worse banks teamed up; accounts from different entities were closed at the very exact time. According to local news site Emol in March of this year "In an insert published this weekend in the newspaper La Tercera, both platforms revealed that the same day, the two banks informed them that their accounts would be canceled. However, when consulting the fundamentals of the decision, they only commented that they had "instructions not to open an account to anyone related to cryptocurrencies."
Two exchanges have been more public on this matter, Buda and Cryptomkt: “In conversation with Emol, Martín Jofré, co-founder and director of CryptoMKT explained: "They have not given us arguments of their decision, we tried to communicate with them, but unfortunately we did not have an answer." "We see the situation complicated because we are exercising a right of economic freedom, we have a legal activity that has no problems, then we think what is happening is serious,"
Later in April of this year:
Buda updated their clients through email letting everyone know that the court accepted their request on their lawsuit against the banks Itau and Banco Estado. During the lawsuit process, the banks have been ordered to re-open the accounts.
Currently this December:
Another exchange that was also affected by these simultaneous account closing is crypto exchange Orionx. The exchange is also battling on this matter, and a few weeks ago The Supreme Court of Chile referred to their case in particular; issuing a verdict on the conflict between Orionx and
Chile´s public state bank named BancoEstado. The decision was not favorable for the exchange.
This is what The Supreme Court ruled:“The purchase and sale of virtual currencies and cryptocurrencies such as Ethereum, Ripple, Litecoin and Bitcoin, all consisting of computer programs, specifically algorithms that, as such, lack physical manifestations and have no intrinsic value as well -generally- one that has support from a particular government or from a company, being defined and controlled by a decentralized group of users that use the Bitcoin protocol on the Internet, in addition to which currently the financial activities carried out with them do not have a regulatory framework "
They added:"As long as there is no regulatory recognition of the activity, this in order to comply with legal regulations and those issued by the entity entrusted by law to control it, which seeks to prevent the bank and its products from being used for the purpose of carrying operations of money laundering or financing of terrorism, among other possible risky activities "
I believe this extremely unfair because crypto exchanges have to sit down and wait for the government entities to decide that cryptocurrency is an important matter and began a process the regulates this digital currency. Meanwhile, the crypto market does not sleep, and this makes life harder for Chilean investors and traders.
According to fayerwayer, “Orionx regrets the adverse decision of the Supreme Court published today, and does not share the arguments on which this entity relies to make the decision to reject the protection appeal. Orionx wants to clarify that this ruling does not involve the closing of current bank accounts of the company. This is because there is a current precautionary measure decreed by the Court for the Defense of Free Competition, which prevents banks from closing the aforementioned accounts.”
On a meeting this past week with Chief Legal Officer and Lawyer, Sergio Peñaranda from crypto exchange Chile Bitcoin we spoke about the situation with crypto exchanges in Chile, especially now that The Supream Court has ruled in favor of Banco Estado. According to Sergio, "The Supreme Court, which is at the top of the hierarchical order of the Chilean Judicial Branch, has supported the closure of accounts to Orionx by the Main State Bank (Banco del Estado). This ruling creates jurisprudence where the denial to the access of decentralized technologies that transport value is affirmed. The transmission and transportation of value is subject to monopoly exercised by the state through centralized fiduciary money systems such as the Chilean Peso or the American Dollar. By curbing this decentralized technology, the only thing that is evident is the massive historical importance represented by bitcoin and the disarmament of the coercion that the state maintains against our natural rights of exchange and disposition of private property". Hopefully, this ruling on Orionx won’t affect all the other legal efforts that are being made by other exchanges.
I believe people are entiled to their own opinion, and sure many of these opinions can be negative towards crypto and thats fine, but banks provide a service and refusing to work with certain companies just because they are linked to cryptocurrency should not happen when you play by their rules. After a company hands out and fills out every document requested by a bank, and everything is in order, there should be no diference on what type of business you run. Unfortunately even though exchanges give all the required information their bank accounts are still being closed or denied; make your own conclusions.
On the other hand, I believe it’s unfair for euntrepenurs who are simply offering a service that includes this new tecnlogy. It's not a matter of never using banks or praising exchanges; it’s a matter of freedom to chose what currency you like best, what finaicial entity fits your needs and that should be entirely peoples decision.
Hope you enjoyed it, feel free to comment!