Chilean Central Bank: Cryptocurrencies Are Unable to Substitute Fiat Money

The Central Bank of Chile believes that cryptocurrencies are unable to substitute traditional money, according to an in-depth report on crypto issued Feb. 7.The document, signed by the central bank's president Mario Marcel, was prepared upon request of the Tribunal de Defensa de la Libre Competencia.

The organization actively participated in a recent legal battle between Latin American crypto exchanges and Chilean banks.

"Currently, there is no evidence that would allow the conclusion that Bitcoin, or any other crypto asset, or crypto assets in general, will substitute legal currencies. To achieve that goal, relevant legislative framework and regulation have to be adopted."

The report also mentions volatility, limited acceptance and slow payments processing as the key obstacles to the mass adoption of crypto.

Regarding statistics on businesses that accept crypto as payment in Chile, BCC stated that the crypto market in the country is "Negligible" in comparison to the traditional one.

The document also hints at a possible approach to crypto regulation in Chile.

The BCC report comes almost a year after the case involving local crypto exchanges Buda, CryptoMkt and Orionx began.

The three firms started a legal battle in April, soon after their banking accounts were closed by several Chilean banks.

The government seeks to control crypto profits.

This January, the Chilean Internal Revenue Service obliged taxpayers to mention crypto gains when they calculate annual income tax, given that crypto falls under the definition of intangible assets.