For so long there has been a huge disparity in opinions when it comes to crypto enthusiasts and the proponents of mainstream or traditional financial institutions. A number of banking institutions in places like India have long been very strict when it comes to cryptocurrency exchanges. The latest battleground was Chile where, unfortunately for the cryptocurrency exchanges in the country, the bank won. The Third Chamber of the Chilean Supreme Court on December 6 ruled in favor of the state-owned BancoEstado in an appellate court case that was filed by Orionx, a Chilean digital asset trading platform.
Orionx file the appeal with country’s supreme court after the state-owned BancoEstado abruptly terminated its account and banned it. The court’s justification for the ruling reaffirmed that the bank could not obtain sufficient information to monitor transactions in the exchange and determine who the cryptocurrency traders actually were.
Is This the End of Crypto in Chile?
With more and more cryptocurrency exchanges cropping up every now and then, the global exchange market continues to become very competitive especially due to intensive efforts by key players such as the U.S., South Korea, and Japan who are currently dominating a huge chunk of the crypto trading volume and activity. In most of these places, one common element when it comes to the crypto-related policies implemented by the governments is that financial institutions, more so banks, are allowed and encouraged to provide stable banking services to the exchanges.
South Korea’s Financial Services Commission (FSC), for instance, recently gave banks in the country the green light to work with businesses whose products or services were related to digital currencies. Also, the Seoul Central District Court also recently delivered a ruling on a high-profile case between one of the country’s biggest commercial banks and a small cryptocurrency exchange – the ruling was in favor of the exchange, something that established quite a strong precedent across the entire crypto industry.
As it turns out, South Korea and some other crypto-friendly countries, exchanges are, by default, permitted to freely deposit and withdraw funds from major banking institutions. Therefore, any abrupt termination of “partnership and services by the banks without sufficient evidence or reasoning” is a “breach of contract.”
With more countries moving towards the implementation of sustainable, practical and efficient crypto-related regulatory frameworks, countries like Chile that deny crypto-related business access to stable banking services are likely to be left behind in the very competitive global crypto market. Over the past seven months, no less than three major banks in Chile have unilaterally shut down the bank accounts of a number of cryptocurrency exchanges in the country. In fact, BancoEstado has even gone as far as putting strict policies in place to prohibit any form of relationship with any type of crypto business. This is certainly not a good sign for the country’s crypto market.