Central Bank Of Chile (BCC): Cryptocurrencies Haven’t Been Able to Substitute Traditional Money

A report issued by Chilean Central Bank shows that according to their analysis, cryptocurrencies haven’t proven to be an alternative to traditional money.

The report was made on the direction of Tribunal for the Defense of Free Competition (TDLC) which is a special and independent Chilean jurisdictional body, subject to the directive, correctional and economic superintendence of the Supreme Court, whose function is to prevent, correct and punish attacks to free competition. It is a collegiate court, composed of three lawyers and two economists, which decides on infringements of free competition and controls concentration operations, among other functions.

The document was signed by central bank’s president Mario Marcel who was earlier in favor of cryptos. In the summer of 2018, Mr. Marcel made comments indicating that his administration is considering developing a legislative apparatus designed to regulate and monitor activities pertaining to Chile’s cryptocurrency sector.

He had stated:

“Incorporating a regulation would allow having a registry of the participants in these activities and thus have information to monitor the associated risks,” adding that “These activities could be developed under more robust standards and mechanisms, especially in terms of market transparency, consumer protection, and prevention of money laundering and terrorist financing.”

Now the Central bank of Chile believes even though the objective of Bitcoin and other cryptos was to replace fiat money, it is just in an early development stage. The future of technology and global adoption is uncertain.

The report said:

“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 price and value of cryptocurrencies can change at any point in time making it highly speculative. Many people don’t know about cryptocurrencies, and as such, they tend to even doubt their existence and usage scenarios. Also, only a handful of businesses accept it as a form of payment. This is one of the obstacles to people who want to use it for their entrenched day-to-day transactions.

Chile has been actively looking to regulate cryptocurrencies. Just last month, the Internal Revenue Service of the country informed that cryptoassets will also have to be filled on the Annual Income Tax Returns. This shows that regulatory agencies all over the world are playing a more active role in controlling the market.