Chilean Cryptocurrency Exchanges Take Banking Blockade to Appeals Court

Chile’s largest cryptocurrency exchanges, Buda, CryptoMarket (Crypto MKT), and Orionx recently applied to an appeals court to confront a banking blockade they’re currently facing.

As covered by CCN, the cryptocurrency exchanges recently saw Itau Corpbanca, Bank of Nova Scotia, and the state-owned bank Banco del Estado de Chile shutdown their accounts with no proper explanation. At the time, Banco Estado revealed it decided “not operate with companies that are dedicated to the issuance or creation, brokerage, intermediation or serve as a platform for the so-called cryptocurrencies.”

The appeals court agreed to hear the cryptocurrency exchanges, although their bank accounts remain closed. Per Bloomberg, Chile’s financial institutions are seemingly implementing a blanket ban on the cryptocurrency industry, a move that’s worrying crypto enthusiasts.

Guillermo Torrealba, Buda’s chief executive officer, was quoted as saying:

“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.”

While cryptocurrencies weren’t yet huge in Chile, the market was growing. Buda, Torrealba’s company, traded about $1 million per day before the banks decided to shut down its accounts. According to its CEO, the exchange is self-regulated and uses the same standards the financial industry uses to know its customers. This, he revealed, includes running checks with local and international authorities.

Chilean news outlets are now speculating the blanket ban comes from the government, as Chile’s Financial Stability Council, an organization with representatives from the Finance Ministry, the country’s central bank, and the securities, banks and pension funds regulator, issued a warning on cryptocurrencies on April 5.

While most financial institutions didn’t reply when reached out to, Itau Corpbanca’s chief executive Milton Maluhv stated on March 27 that the bank supports startups and new technologies, but argued the cryptocurrency industry needs more regulation, adding that the “bank is following internal norms to decide on closing individual accounts.”

Torrealba noted that the appeals court may help the cryptocurrency exchanges. As covered, Crypto MKT’s co-founder, Martin Jofré, has stated that with Banco Estado turning its back on the company, it was left with no banking.

Orionx, on the other hand, revealed that users’ funds are “fully backed” and that there is “no risk of insolvency.” It added that it believes the bank’s moves are “incorrect and anti-competitive.”