Economy & Regulation
In a landmark judgment, the Supreme Court of Chile has ruled that state-owned Bancoestado was justified in closing the accounts of cryptocurrency exchange Orionx without explanation. The judges ruled that the bank acted in compliance with laws on money laundering and terrorist financing, a threat allegedly posed by censorship-resistant, decentralized cryptocurrencies.
Cryptocurrencies Lack ‘Intrinsic Value’
Cryptocurrencies such as bitcoin are not legally recognized in Chile, but they are not banned, either. Nonetheless, the ruling has significant implications for relations between banks and crypto exchanges. Commercial banks can now shut down exchange accounts without notice, while pointing to laws on money laundering and terrorist financing.
According to local media reports, the Supreme Court claimed that digital assets lack “physical manifestation” and “have no intrinsic value.” It also took issue with the fact that they are not controlled or issued by governments or companies.
“These characteristics and elements determine, therefore, the current impossibility for the bank to comply with the aforementioned obligations,” said the court in its judgment. “It prevents it from knowing in depth (of) 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 added:
It is precisely this impossibility of knowledge and of fulfilling the duties that weigh on the bank, which gives support to the decision to close the bank account of the plaintiff, which consequently cannot be called arbitrary.
Bank Cuts Ties With Crypto Exchanges