Popular South American cryptocurrency exchange Buda criticized actions undertaken by Colombian banks leading to the sudden closure of its bank accounts without notice.
Government Blocks What It Doesn’t Understand
The event took place after three Colombian banks closed the accounts belonging to Chilean cryptocurrency platform Buda. The actions undertaken by Banco Bilbao Vizcaya Argentaria, Davivienda and Bancolombia prompted an immediate response from Buda, whose director Alejandro Beltran promised to take any action necessary to recover the accounts.
“There are mixed messages coming from the financial sector on innovation. The Colombian government promotes innovation and development, but when it comes down to it, they block what they don’t understand and are putting the brakes on financial technology,” said Beltran.
South America Loves Buda
Buda has approximately 35,000 active accounts in Colombia, a testament to its popularity in the country which has seen a massive surge in demand of everything crypto-related over the past few years. In reality, the nation only follows in the footsteps of its neighbors such as Chile, Argentina, and Peru, in which an additional 45,000 bank accounts are used for the same purpose.
As the third largest South American economy, Colombia’s cryptocurrency sector is facing mounting pressure from the regulators who see it as a grey zone and a hotbed for potential criminal dealings such as money laundering.
At the same time, the state promises no support for those who lose money in dealing with cryptos. Colombian central bank Governor Juan Jose Echavarria has gone even further, claiming that cryptocurrencies are both a bubble and an illegal currency in the financial system in his country.
Not all Lost for Buda
In April 2018, Chile’s Tribunal for the Defense of Free Competition (TDLC) issued an order directing three of the country’s largest banks to reopen the accounts belonging to crypto exchanges that had been suspended indefinitely.
The order came after Buda initiated legal action against ten banks for closing accounts belonging to the cryptocurrency exchange after issuing a notice. In the lawsuit, the company claimed that the banks were violating fundamental anti-competition laws and stated 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. After ruling in favor of the cryptocurrency exchange, the tribunal ordered banks to resume operations and sign a contract with the cryptocurrency exchange.