Chilean Supreme Court Allows State Bank to Shut Down Account of Local Crypto Exchange

Dec 10, 2018 at 22:58

The Third Chamber of the Chilean Supreme Court ruled out in favor of state-owned bank, BancoEstado after it banned local crypto exchange Orionx by shutting down its bank account.

“These characteristics and elements determine, therefore, the current impossibility for the Bank to comply with the aforementioned obligations, since it prevents it from knowing in depth the financial activities related to cryptocurrencies developed by the appellant, the most relevant characteristics of its operations, the foundations on which these are supported and, finally, if their amounts are excessive or not,” the court’s decision read.

Notably, the Chilean Supreme Court explained that its decision rooted from the fact that the bank cannot obtain sufficient information to monitor transactions and determine the identities of the senders of crypto payments.

In the past eleven months, other major Chilean banks such as Itau Corpbanca and the Bank of Nova Scotia, also shut down the bank accounts of most of the country’s largest cryptocurrency exchanges.

The banks even implemented a strict policy that prohibits any connection of any sort with a cryptocurrency company.

Analysts fear that the landmark decision may easily kill the local crypto industry citing that countries such who allow crypto exchanges with easy access to banking services and insurance like Japan, South Korea, and the United States have experienced tremendous growth in the use of the disruptive technology.

Last month, the Swiss Financial Market Supervisory Authority urged banks to toughen their stance on cryptocurrency trading as it suggests financial institutions to adopt risk weighting that is eight times the value of the digital currency due to its extreme volatile nature