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Chile has been experiencing exponential growth in the cryptocurrency market, based on government initiatives, recent regulatory developments, and serious investments. This overview provides the current state of the cryptocurrency market in Chile, including local government initiatives, regulatory compliance scenarios, major regulatory bodies and associations, recent investments, and key players in the industry.
In November 2023, the Ministry of Finance issued a report in which it explained that the OECD Committee on Fiscal Affairs had agreed to a Crypto Asset Reporting Framework, which is in effect a reporting framework for crypto assets that was drawn up to enhance fiscal transparency against the backdrop of a financial market heading toward complete digitalization and growing relevance for crypto assets. Its adoption by Chile would not only bring the country into line with the international standards regarding this but would also make certain that the digital money is well cared for.
In the early part of April 2021, the Chamber of Deputies in Chile presented a bill for the regulation of cryptocurrencies within the country. The bill is purportedly aimed at bringing clarity and giving legal certainty to activities done in crypto: trading, exchange, and mining. If it is passed into law, then this bill would grant the basis for regulating the cryptocurrency market by the financial authorities in Chile, establish rules on its taxation, and bring in consumer protection.
In Chile, the value one pays to acquire cryptocurrency can be deducted against the gains made from selling the same. Since cryptocurrency is an intangible asset, it is not subject to Chile's VAT. At the same time, invoices and receipts should be provided by those taxpayers who get involved in cryptocurrency transactions.
The current law in force in Chile that regulates crypto assets is Law No. 21.521, better known as the Fintech Law, whose principal objective is to create a more competitive and inclusive financial system by incorporating innovation and technology within the scope of control of financial services. This law came into force on January 4, 2023, and its process of implementation is not yet complete. Within this regulatory framework, crypto assets and "virtual financial assets" are defined as digital representations of value, goods, or services, excluding currency, which can be digitally transferred, stored, or traded. This law covers, in its entirety, all activities that involve crypto assets—also used as financial instruments and a means of payment.
The main regulatory bodies that are actively looking for cryptocurrency solutions within Chile are the Financial Market Commission, La Comisión del Mercado Financiero, and the Central Bank of Chile. These institutions shall therefore play a very instrumental role in the supervision and regulation of the cryptocurrency market to ensure compliance with laws and standards.
Several associations also control and regulate the cryptocurrency market in Chile. The most famous ones are the Crypto Valley Association, the Chilean Association of Venture Capital, and the CFA Society Chile. The goal of these associations is to create an atmosphere of good practice that will enhance the growth of the cryptocurrency business all over the country.
The investments that have taken place in the cryptocurrency market in Chile involve mergers and acquisitions, partnerships, funding, and product and service launches.
On 13 March 2023, one of the leading digital-asset exchanges, Bitfinex, invested in OrionX, a crypto exchange company based in Chile. This would underpin and root the presence of Bitfinex in Latin America and support the expansion plans laid down by OrionX for expansion into multiple new countries with a current user base of half a million customers doubling in less than one year. This certainly underlines Bitfinex's ambition to take advantage of the fast-growing cryptocurrency market in Latin America and provide OrionX with the necessary resources for its ambitious growth plans.
The same month, Latin American e-commerce giant Mercado Libre extended cryptocurrency trading to Chile in collaboration with Ripio, a regional cryptocurrency firm. This would allow the company, out of its platform, to give, therefore, the possibility of trading with its customers in Chile locally, the same way it does in each market where Ripio is located, using the knowledge and local infrastructure that enables this operation. This would cement Mercado Libre's commitment to the tireless satisfaction of emerging user needs and to capitalizing on the upward demand for services related to cryptocurrency in Latin America.
In August 2022, BTG Pactual launched the first-ever public crypto fund for investors in Chile. This has been one huge step toward the much-needed involvement of Chilean investors in cryptocurrency investing. All this will be done while keeping in mind the demand for digital asset investment and also meeting the regulatory requirements of the country.
Key market players have been driving the growth of the crypto market in Chile. Major companies play a very important role in this regard. Some of the key participants include Krypto Ledgers, Sugarblock.io, PágaloAsí, Orionx.com, NanoBanco, eToro, Plus500, AvaTrade, Skilling, Binance, and Bitstamp. They present a wide variety of services related to cryptocurrency exchange, cryptocurrency trading platforms, financial services, and investment opportunities, hence holding great importance.
The cryptocurrency market in Chile is expected to reach US$5 million in 2028 from US$4 million in 2023, at a CAGR of 3.38%. Chile represents a very dynamic and fast-growing cryptocurrency market, impelled by government initiatives, regulatory developments, and large investments. Thanks to the friendly regulatory framework and active participation by key players, Chile could well turn into the major center of cryptocurrency activity in Latin America. With the growing market, keeping oneself updated on regulatory changes and investing opportunities will become paramount for stakeholders to sail through this thrilling and fast-moving industry.
