Chile - Congress passed a new Fintech law that will regulate crypto
The law needs to be signed by president Gabriel Boric before the legislation goes into effect.
On 4 October, the Chilean Senate approved a Fintech law after approximately one year of debate in the dual-chamber legislature amidst a presidential transition.
Chile’s Ministry of Finance and the Ministry of Economy introduced legislation for rules on governing the Fintech sector to the lower house in September 2021. FinteChile lobbied former president Sebastian Piñera government anxiously for this legislation for around two years. The main author and political driver behind the law was former president Piñera (2018-2022) and his Finance Minister, Rodrigo Cerda.
President Gabriel Boric (March 2022-present) and his Finance Minister Mario Marcel have so far not interfered with the Fintech Law in Congress, mainly because Boric lacks a parliamentary majority. The law now moves to Boric’s desk for approval, modification or veto.
Source: Chainalysis 2022 Geography of Crypto Report.
The law has no specific implications for Bitcoin and Ethereum yet because the framework is still quite broad. But exchanges reacted positively to the news because there will be clear regulations for exchanges and P2P platforms.
The Fintech law leaves an open question surrounding how crypto assets will be treated by regulators in Chile but sets the securities regulator (CMF) and the Central Bank as the two entities who will set regulations for Bitcoin and Ethereum assets.
There is still a lot of regulatory uncertainty here. Chile ranks highest for DeFi transaction volume, according to Chainalysis. One big question is how the law will treat DeFi tokens and stablecoins. Consumer protections and anti-fraud is a big issue in Chile. It is possible that Boric’s Finance Ministry adjusts the law to de-risk consumers’ savings and waits on the United States and the European Union before moving forward on DeFi regulations.
President Boric is a millennial president but he has said nothing about crypto. Boric is not openly pro-crypto or anti-crypto. Neither is crypto as politically sensitive in Chile as it is in neighboring Argentina. The way he approaches the law will be the first public indication of his posture.