Chile’s state-owned bank has dumped three cryptocurrency exchange clients, according to a local media report.
Banco del Estado de Chile informed Orionx, CryptoMKT and Buda.com that their accounts would be closed in 10 days, the newspaper El Mercurio reported Thursday. The move came after Canada's Scotiabank and Brazil's Itaú said they would be closing the accounts of the three exchanges.
The Chilean bank, more commonly known as BancoEstado, was the last institution still providing financial services to the three exchanges, El Mercurio reported. As a result of the bank's decision to cut them loose, the exchanges – reportedly the only ones in the country to obtain traditional bank accounts – will no longer have access to wider financial services.
The bank did not give a reason for the move, but said in a statement:
Even before BancoEstado severed ties, Buda.com CEO Pablo Chavez said that without Scotiabank and Itau, his startup would “have to move to a different format,” possibly by opening a digital bank of its own. However, he described that option as being “very bad."
Similarly, CryptoMKT director and cofounder Martín Jofré said his startup was short on banking options prior to the BancoEstado bombshell. He added:
In contrast, Orionx reportedly downplayed the impact of losing its last bank account, telling El Mercurio that customer funds "are fully backed and there is no risk of insolvency of them." No details were provided in the article to support this claim.
BancoEstado's decision comes amid increased scrutiny by regulators worldwide of banks providing services to crypto exchanges.
Note: Some statements in this article were translated from Spanish.
BancoEstado image via CARLOS SALGADO MELLA/Wikimedia Commons
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.