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Chilean Cryptocurrency Exchanges See Banking Blockade with Shuttered Accounts

Last Updated March 4, 2021 5:06 PM
Francisco Memoria
Last Updated March 4, 2021 5:06 PM

Three Chilean cryptocurrency exchanges, BUDA, Crypto MKT, and Orionx, are about to lose banking services as BancoEstado, the last bank supporting cryptocurrency exchanges in Chile, has announced it’s closing the trading platforms’ accounts.

According to local news outlet El Mercurio , the financial institution decided to, for now, “not operate with companies that are dedicated to the issuance or creation, brokerage, intermediation or serve as a platform for the so-called cryptocurrencies.”

While El Mercurio reports BancoEstado decided to close the accounts of all three cryptocurrency exchanges, it has reportedly only sent crypto exchange Orionx a notice  so far, informing it of its move. The notice read (roughly translated):

“We hereby inform you that BancoEstado has decided to close the account of which you are the owner, in accordance with the power provided in the Accounts Contract.”

This is a notable move, as CCN.com recently reported that Chilean cryptocurrency exchanges BUDA and Crypto MKT saw banks shutter their accounts. In response, the exchanges issued a public statement calling on the country’s banking association, ABIF, to clarify its stance on the cryptocurrency industry.

At the time, the exchanges noted one of the banks revealed it had instructions to “not open an account for anyone that has relation to cryptocurrencies.” BancoEstado was the only financial institution still working with the exchanges.

Cryptocurrency exchanges react

In response, BUDA CEO Pablo Chavez stated that if BancoEstado goes through with the move, the company will have to “move to a different format, the most extreme option would be to open a digital bank that allows operation.”

Martin Jofré, Crypto MKT’s co-founder, stated that if BancoEstado turns its back on the caompy, the exchange would be left with no banking. If it comes to that, he emphasized, the company would return users their funds.

Orionx, knowing BancoEstado is shuttering its account, also ensured users their funds are “fully backed and there is no risk of insolvency.” Reacting to the financial institution’s move, Orionx  sated it doesn’t agree with it, and believes “it is an incorrect and anti-competitive measure.”

In their joint statement, BUDA and Crypto MKT both argued they pay value-added tax (VAT), are registered with the Chilean Financial Analysis Unit (UAF), and follow anti-money laundering and anti-terrorist financing practices, while providing its users a safe platform.

ABIF, the organization the cryptocurrency exchanges addressed in their statement, has since responded and claimed it isn’t responsible for solving the problem, as this is “a matter that must be addressed and resolved in the context of the individual relationship of each bank with its customers.”

Santiago image from Shutterstock.