Unprecedented discussion between banks and exchange houses
The meeting of the Finance Commission about cryptocurrency regulation took place in Santiago, Chile 15th of May 2018. It turned out as an after-effect of the conflict between cryptocurrency representatives and banking sector — the primary Latin American exchanger CryptoMKT and Buda. The Central Bank of Chile closed accounts and banned transactions based on money laundering suspicions.
Ten participants raised their pros and contras voices about cryptocurrencies during the meeting.
KICKICO got the first-hand information from our Latin American colleagues.
What is on the mind of cryptocurrencies operators
“It is a history. More and more financial institutions discuss the crypto industry. It’s luxury”, Martin Joffre, CryptoMKT CEO said. Just FYI CryptoMKT was a partner of the significant blockchain event: Blockchain Congress 2018.
Key members of the community shared the opinion that the meeting was a big step towards regulations problem-solving. The main players were present and open for discussions. Agustín Feuerhake from Buda pointed that because the whole industry is not yet developed enough traditional regulators face a lot of difficulties. Buda CEO Pablo Chávez highlighted the positive effect of the meeting but emphasised that there is a long way to success for the industry at the authority level.
Chile significant regulators avoided mentioning bitcoin earlier although on 5th of April 2018 the Council of financial stability said it’s high volatility.
Cryptostocks see the current discourse as conservative, but they hope the future of the market regulation will be liberal.
What banks think
Mario Marcel, the president of Chile’s Central Bank, was the most sceptical.
“Cryptocurrencies don’t play money function. In fact, no country has recognised them as a legal tender. It is not a reliable unit of calculation due to high volatility; it is not a good investment tool due to the price changes. There is no organisation interested in ensuring it’s stability. These factors make cryptocurrency irrelevant for the country’s monetary policy”, he said.
Mario Marcel added
- It’s risky to buy and own digital currency
- Cryptocurrency doesn’t have neighed support, nor regulation that makes it a dangerous instrument because of possible fraud or theft.
- They’re not the only coin but people who own them. If there is an industry, it is meaningful to change the regulation.
- Regulation will help to get information for the risk monitoring. There is a need for standards that will make the market transparent, prevent money laundering danger and financial terrorism
- On the other hand, regulation can give a false sensation of security
Representatives of financial institutions were cautious and spoke about the immaturity of the cryptocurrency market in general as well as its volatility and the “dark side”. The experts added that Chile follows the international criteria regarding the cryptocurrency regulation. But different jurisdictions have distinctions, so they are going to spend the time to study the problem.
“We study cryptocurrencies concerning financial stability risks. We haven’t recorded risk so far because the amount of money is limited. The connection with the other markets is limited as well”, Catherine Thornel, capital market coordinator, explained the position of the treasure house.
What lawyers think
“In contrast with the countries that use the common law and have a possibility to interpret it progressively Latin America uses the civil law for the whole continent. In the UK, Australia, the United States the law system is assessed following changing circumstances, which allows the judge to evolve.
Roman law countries like France, Spain, Italy and Latin America have codified systems. It’s hard to work within the system because regulators know just how to comply the standards. They don’t think how to become more flexible. Therefore, the most laborious task for the regulators is to understand that technological innovation requires the knowledge of the tools”, Albi Jaramillo, co-founder of the decentralised community LegalBlock said.
Crypto community goals:
- To build bridges and explain to regulators basic principles of the blockchain
- Regulators need people who understand the technology, help them and provide confidence
- To realise that law could resolve not everything. It is no rush to settle, but it is necessary to observe how the system evolves
We thank you for the information:
- Eduardo Lemp, CryptoChile
- Albi Jaramillo, LegalBlock
- Luis Esparragosa, Criptonoticias
- Martin Jofre, CryptoMKT
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