Business 16 July 2018Erik Gibbs
Chile appeals court orders state bank to work with crypto exchanges
When Chile’s state-run Banco del Estado de Chile (Chile State Bank, BEC) and Itau Corpbanca, along with eight other banks, decided to close accounts of several cryptocurrency-related exchanges in April, they did so believing that the law was on their side. The courts showed them, however, that they were more than likely wrong when they ordered the banks to, at least temporarily, reopen accounts of the Buda and CryptoMarket exchanges. Now, Chile’s Court of Appeals has confirmed that the banks were definitely wrong, and have ordered the BEC to permanently reopen the accounts of Orionx, and to not treat the exchanges differently than they would any other business.
According to Chilean media outlet La Tercera, The Fourth Chamber of the Court of Appeals rule in favor of Orionx cryptocurrency exchange, which argued that the account closure was against the law. In siding with Orionx, the court said that the decision by the bank was an “arbitrary and illegal action, which constitutes a deprivation of the right protected by Article 19 No. 2 of the Political Constitution of the Republic, that is, the right to equality before the law.”
The banks had previously argued that they were only acting in accordance with “regulatory recognition of [cryptocurrency trading]” when they closed the accounts. That apparently has not been a strong enough reason to refuse business from a legitimate entity in the country, according to the appeals court’s decision. In response to the changing environment regarding crypto, BEC President Mario Marcel said in May that the bank was working on developing regulatory framework so that it could “monitor risks” associated with cryptocurrency.
Three exchanges had their accounts closed by the banks in April—CryptoMarket, Buda and Orionx. Buda and CryptoMarket were the first to have their accounts reopened, followed now by Orionx. CryptoMarket, at the time the temporary suspension was lifted, opened an account with Bancoestado, the country’s only public bank.
The move should produce a positive response in the country, with at least a slight increase in investor confidence appearing. With the lull seen currently in the markets, it’s a great time for traders to get onboard and move fiat to crypto in advance of the impending price increases.
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