Banks refuse to include cryptographic companies as clients due to the risks that are otherwise managed when serving other types of clients.
The conflict between banks and cryptocurrency exchanges in Chile is still unfolding, as some banks are reluctant to serve these types of institutions.
A new report produced by the exchanges shows that most of these banks refuse to list crypto companies as clients due to the risks that are nevertheless managed in the case of serving other types of clients.
Cryptocurrency Exchanges Versus Banks in Chile
Cryptocurrency exchanges, as well as other cryptocurrency-related companies, continue to fight private banks for the right to open and manage bank accounts in Chile. The legal fight, which began in 2018, when several exchange houses closed their bank accounts by various banking institutions, will be defined this year before a national court of free competition.
Buda.com, a Chilean exchange house, produced a document concluding that banks are colluding to deny their services to cryptocurrency exchange houses, for reasons applicable to other businesses, such as companies that operate with jewelry, watches, vehicles of all kinds, works of art, or antiques.
Regarding these businesses, the document states that “are universally recognized as a possible means for money laundering – and who, moreover, are regulated by being obligated subjects in comparative law, but not in Chilean law.” The document also criticizes the use of money laundering, as well as the lack of clear regulations in crypto, as mere pretexts for taking non-competitive actions.
Explaining the Conflict
The defense of private banks focuses on the fact that there are still no defined protocols to manage the risks associated with cryptocurrency operations, and that money laundering activities, if they occur, could not be detected or managed. However, exchanges dispute that banks act against exchanges without clear laws, and 79% of shutdown or denial-of-service events occur within a three-month period.
Bice Bank, one of the banks included in the lawsuit, claims that it had defined that it would not operate with companies based on cryptocurrencies three years before the trial began, establishing that it would do so only when there was due diligence and anti-money laundering and terrorism financing regulator.
On the other hand, Security Bank, another financial institution, pointed out that its decision derives from the fact that cryptocurrency exchanges “do not have the necessary regulation to adequately prevent these risks, and will not have it in the short term either.”
However, regulation in the field is slowly unraveling, as Chile recently passed and sanctioned a fintech law that includes cryptocurrency in its scope. In addition, some exchanges have already opened accounts after signing due diligence agreements, as Buda did with BCI bank in October.
By Audy Castaneda
