With the growing adoption of cryptocurrency across the globe, regulation of this asset class has become a major concern for global financial regulators.
While some countries such as Japan, South Korea and Thailand are implementing laws that would foster the cryptocurrency industry while minimizing its associated risk, other nations such as India, have taken a stricter stance that may result in an outright ban of crypto-related transactions and Chile look to be next up on the register.
During a forum of the Finance Commission of Deputies on Tuesday, the president of Chile’s central bank, Mario Marcel said the bank is considering establishing cryptocurrency regulations to monitor risk and to essentially keep a close eye on the industry.
Currently Cryptocurrencies are not considered as money or securities in Chile. However, there are no laws in place that prevent citizens from executing crypto transactions.
“Considering that these assets exist in the country, there is an associated industry and people who own them, it is questionable if it would be appropriate to change this situation,” Marcel said.
As it is with many parts of the world, cryptocurrency and blockchain technology adoption is growing in Chile. While regulatory frameworks are important for the growth of an industry, the authorities need to be careful with how these regulations are implemented.
“Incorporating a regulation would allow having a registry of the participants in these activities and thus have information to monitor the associated risks,” Marcel said.
“These activities could be developed under more robust standards and mechanisms, especially in terms of market transparency, consumer protection, and prevention of money laundering and terrorist financing.”
According to Marcel, an ad hoc regulation could provide a false “sense of security” that could lead the public to underestimate the risks associated with crypto investment.
Last Month, crypto exchanges operating in the country pushed the Chilean Association of Banks (ABIF) to provide a clear position on cryptocurrencies and its trading activities after some of their accounts were closed by various domestic banks.
The exchanges had taken to an appeals court to protest this closure, which was seen by some as the banks using their power to curtail the cryptocurrency industry.
At the end of April, the Anti-monopoly court of Chile ordered state bank Banco del Estado de Chile and Itau Corpbanca to re-open the accounts of Buda cryptocurrency exchange, while its lawsuit continued against 10 other domestic banks.