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Chile’s Bancoestado Reopens Bank Accounts Belonging to Crypto Exchanges

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Chile’s Bancoestado Reopens Bank Accounts Belonging to Crypto Exchanges

Bancoestado, the only state bank in Chile, has reopened the accounts of cryptocurrency exchanges in the country. The move comes after a court directed banks to resume normal banking services to two cryptocurrency exchanges, Cryptomkt and Buda.com.

Court Directs Banks to Resume Banking Services

Chile’s Tribunal for the Defense of Free Competition (TDLC) passed an order in April 2018 directing three of the country’s largest banks to reopen the accounts belonging to crypto exchanges that had been suspended indefinitely. Bancoestado, Scotiabank, and Itau were the banks ordered by the tribunal to resume regular banking services.

The order came after Buda sued ten banks for closing accounts belonging to the cryptocurrency exchange in the first week of April 2018 after issuing a notice. In the lawsuit, the firm claimed that the banks were violating fundamental anti-competition laws. It went on to state that the sudden closure of accounts meant complete loss of business, especially as it was forced to transfer all funds to its users within a very short span of time.

The ten banks against whom the lawsuit was filed included Bancoestado, Itaú, Santander, Banco de Crédito, Banco de Chile, Bice, and BBVA. Ruling in favor of the cryptocurrency exchange, the tribunal ordered banks on April 24, 2018, to resume operations and sign a contract with both cryptocurrency exchanges.

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In its lawsuit, Buda had requested the tribunal to penalize all banks under Chilean anti-business laws. “Anticompetitive behavior consisting of abuse of their collective dominance position and by engaging in an abusive exploitation that excludes their dominant position with the purpose or effect of preventing, restricting and hindering competition in the affected markets,” read the petition.

Itau and Scotiabank to Appeal Order

Itau, a subsidiary of the Brazilian Unibanc, and the Chilean unit of Canada’s Scotiabank will move higher authorities challenging the court order, according to local media outlets. La Tercera quoted a local law firm saying, “The only option left before banks is to approach the Supreme Court now but till then they have to reopen the bank account of the two cryptocurrency exchanges.”

Global Crypto Regulation Updates

In a first of its kind step, the Zimbabwean High Court reversed the Central Bank’s order to restrict cryptocurrency operations. The petition to lift the ban was filed in the High Court by Bitfinance. In a landmark verdict, Justice Alfas Chitakunye provisionally lifted the ban.

Chitakunye ruled, “The ban issued by respondents through a letter dated May 15, 2018, against the applicant, directing it to cease its operations, shut down its virtual currency exchange business and ordering the closure of its bank accounts with its bankers, be and is hereby suspended pending the return day.”

The Reserve Bank of India (RBI) has also deemed trading cryptocurrencies against fiat as illegal and gave a three-month window allowing banks to service users to trade from cryptocurrency to fiat. Post that, they are ordered to permanently suspend all such services. Local cryptocurrency exchanges have also moved the court against the verdict.

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