Do Cryptocurrency Exchanges Need Tighter Controls?

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Several banks in Chile recently closed the accounts of cryptocurrency exchanges. Banco del Estado de Chile was among the ones ordered to reopen the accounts, at least for now. // File Photo: Banco del Estado de Chile.

Some of Chile’s largest banks have closed the corporate accounts of cryptocurrency platforms in recent weeks, forcing companies such as Orionx and CryptoMarket to find alternate ways to operate in the South American country. Chile’s anti-monopoly court later ordered Banco del Estado de Chile and Corpbanca to reopen cryptocurrency exchange Buda’s accounts while its lawsuit continues against those two banks and eight others. Executives from some of the exchanges assert that the account closures were arbitrary and risk choking out a growing and vital new industry. What is behind the dispute over the closed accounts, and which side will prevail? What regulations and policies need to be put in place so Chile’s banks and cryptocurrency firms have more clarity and predictability? How are these concerns playing out in other countries of Latin America and the Caribbean?

Juan Llanos, independent global compliance advisor: “There are valid concerns about risks, but a blanket reaction such as this is disproportionate and unwarranted. Over the past few decades, banks have operated as de facto, discretionary enforcers of the law, with no transparency or accountability with respect to why they close accounts. What should really matter is the long-term impact on consumers and society at large. It is also very unfortunate that consumers and marketplace participants tolerate governments and regulators always lagging behind technologies. We can put a man on the moon but are not able or willing to design adaptable policy-making and governance mechanisms so that regulatory regimes are able to more easily adapt to fast advances in technology. There are risks in any emerging technology, including and especially in the nascent blockchain technology. Yet governments and markets have the strategic choice to be open-minded, enlightened and future-focused, or…”

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