Chilean cryptocurrency exchanges Buda, Orionx, and Cryptomkt were given notice their accounts will be closed by Banco del Estado de Chile. This comes after the three were also targeted with account closings by Itaú Unibanco Holding S.A. of Brazil and The Bank of Nova Scotia (Scotiabank of Canada).
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Bank of the State of Chile Shuts Down Three Exchange Accounts
Regional news outlet El Mercurio reports Banco del Estado de Chile (Banco Estado) is closing the accounts of three cryptocurrency exchanges. “Banco Estado adopted the decision,” a bank statement is quoted as explaining, “for now, not to operate with companies dedicated to issuing or creating, brokerage, intermediation or serve as a platform for cryptocurrency calls.”
Banco Estado is the country’s only public bank, managing all the government’s financial activity. It has a traditional focus of serving small businesses and the unbanked. It is Chile’s largest issuer of debit cards. It is the third largest bank in the nation, and routinely ranks as the safest bank in Latin America.
El Mercurio stresses that Banco Estado was the final chance for the three exchanges, which have also been squeezed by Scotiabank and Itaú prior to the state bank’s announcement. The above statement was the only comment by the bank as for why it is closing down the exchanges’ accounts.
Orionx told the paper it wasn’t the end of the world, insisting users’ money is “fully backed and there is no insolvency risk.” Pablo Chavez of Buda confided that the summary closings might lead to him starting a bank of his own, though he seemed unexcited about those prospects. Martín Jofré of Cryptomkt echoed Mr. Chavez, seeing Banco Estado has a financial lifeline.
Last month these two cryptocurrency exchanges called on the country’s banking association to issue a clear position regarding the matter.
Various other countries have tried the tactic, often using the pretext of money laundering or tax avoidance. Fall of last year saw a few banks in Singapore cease doing business with several startups that operate with cryptocurrencies. In Kuala Lumpur, Malaysia, the trading platform Luno had its bank account frozen by the country’s tax officials.
What should these exchanges do? Let us know what you think in the comments below.
Images via Pixabay, Banco Estado.
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Author: C. Edward Kelso