Chilean banks have closed the accounts of three cryptocurrency exchanges, dealing a blow to the country’s budding digital currency industry.
BancoEstado notified popular local crypto platform Orionx on March 29 that it would close its checking account within 10 days, according to a letter seen by Citywire Americas. In response, Orionx filed an appeal on April 2 with a Chilean court to reverse the bank’s decision, legal documents state.
The move by BancoEstado came shortly after two privately-owned banks, Scotiabank and Itaú, reportedly also shut down the accounts of two other exchanges.
In its letter, BancoEstado said the closure responded to its ‘decision, for now, not to operate with firms dedicated to the issuance, creation, brokerage or intermediation, or that serve as a platform, of the so-called or denominated cryptocurrencies.’
The bank also said it would keep on using that approach as long as cryptocurrencies aren't regulated. At the moment, Chile doesn’t have specific rules governing digital currencies.
In its appeal, Orionx said it can’t operate without the account because exchanging physical cash would make it impossible to place crypto trades in real time, among other reasons.
The firm also argues that it is registered with the appropriate authorities and that while local regulation doesn’t explicitly allow cryptocurrencies, it doesn’t forbid it either.
Therefore, Orionx has asked the court to reverse the bank’s decision to shutter the account or to at least give it the 60 days that the firm says the law provides it to close the account.
BancoEstado didn’t respond in time to a Citywire Americas request for comment.
Digital currency platforms CryptoMKT y Buda.com also hold accounts with BancoEstado, according to local news outlet El Mercurio, which first reported the news. It was these two firms that saw their accounts shuttered by the Scotiabank and Itaú.
The Chile crackdown highlights the fragmented approach of Latin American regulators and financial institutions to crypto. Mexico, for instance, chose to keep tabs on the industry by regulating it with a ‘Fintech Law’ passed in early March.