Following the Chilean banks’ closure of accounts held by cryptocurrency businesses, three crypto exchanges of the South American country – Buda, CryptoMarket (CryptoMKT), and Orionx – have recently applied to an appeals court to appeal the banks’ decisions, as reported by Bloomberg.
The self-restriction of any involvement with crypto business by Chilean banks started last month. Itau Corpbanca and Bank of Nova Scotia were the first banks to close the accounts of BUDA and CryptoMKT on March 19th, according to local news outlet Emol. This decision was followed by a similar decision taken by the state-owned bank Banco del Estado de Chile, which announced the closure of bank accounts held by all the three crypto exchanges.
Though the appeals court agreed to hear the exchanges’ argument, no order was passed by the court to re-open their bank accounts.
Bloomberg quoted BUDA’s co-founder and CEO Guillermo Torrealba: “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.”
Small yet growing
Unlike other countries which turned hostile against cryptocurrencies, the Chilean market is relatively small. However, since last year’s boom in the sector, the crypto market is growing at a tremendous pace in South America’ss wealthiest country. Buda, the country’s largest exchange, was registering a daily trading volume of around $1 million prior to the closure of its bank account, which now dropped to around $160,000, according to CoinMarketCap.com.
Is it only a start?
Until now, it is not clear if the banks have taken the drastic decision of their own or were directed by the government. However, rumors in the in the market remain that the country will soon see a ban on cryptocurrencies and ICOs similar to China or South Korea.
The cryptocurrency sector is not regulated in Chile, however, according to Torrealba, Buda and other leading exchanges in the country follow self-regulatory rules and also comply with rules imposed on any financial firm.
Though all the banks refrain from releasing any public statement regarding the issue, the CEO of Itau Corpbanca, Milton Maluhy, on March 27 said that financial institutions are still skeptic of cryptocurrency businesses, as the sector needs more regulation. According to him, banks are only following their internal norms to separate themselves from this unregulated industry.