Cryptocurrencies Unable to Replace Fiat Money: Chilean Central Bank
February 13, 2019 1:04 pm
The Central Bank of Chile (BCC) claims that cryptocurrencies are unable to substitute traditional money, according to a detailed report on crypto issued on February 7.
The document, signed by the President of the central bank, Mario Marcel, was prepared upon request of the Tribunal de Defensa de la Libre Competencia (TDLC), which is an independent anti-monopoly institution established to ensure that free competition rules are not violated in the country. The organization was actively involved in the recent legal battle between Latin American crypto exchanges and Chilean banks.
Chile Government Still Unsure About Crypto’s Credibility
According to BCC, Bitcoin (BTC) and other major cryptocurrencies that were created as alternatives to fiat money, are now at an early development stage. Hence, it is hard to predict whether or not they will thrive. However, the BCC itself remains doubtful about the future of the crypto industry.
“Currently, there is no evidence that would allow the conclusion that Bitcoin, or any other crypto asset, or crypto asset in general, will substitute legal currencies. […] To achieve that goal, relevant legislative framework and regulation have to be adopted. “
The report also highlights the volatility, limited acceptance and slow payment processing as the crucial factors that prevent crypto’s mass adoption. As for the businesses that do accept bitcoin payment in Chile, BCC stated that the crypto market in the country is “negligible” when compared to the traditional market.
The document also alludes a possible method for crypto regulation in the country. According to the BCC, cryptocurrencies might be considered as intangible assets and a digital representation of value, which renders them as property. In such a case, they could be used as a medium of exchange to buy goods and services without many restrictions.
Chile has not yet introduced a clear legal framework for regulating crypto. However, the government does seek control of crypto profits. In January 2019, the Chilean International Revenue Service ruled the taxpayers to mention crypto gains in their annual income tax record, because it falls under the category of intangible assets.