Cryptocurrency is rapidly evolving, and governments around the globe are scrambling to establish clear regulations.
Chile, situated on the western side of South America, is known for stability and prosperity. With its capital, Santiago, shining as the economic heart of the country, it boasts a powerful high-income economy. It enjoys leading positions in various global rankings, from economic freedom to competitiveness. One exciting development is the introduction of the Ley Fintec, which is a Fintech Law. The law is expected to transform the economic framework of the country using various possibilities of technology, including the possibility of digital finance. It is extremely significant for the cryptocurrency sector.
Intrigued? Read on to discover how Chile is becoming a leader in crypto regulation and what this means for the future of digital assets.
Chile’s approach to cryptocurrency regulation has taken a significant step forward with the introduction of the Fintech Law or the Ley Fintec. The law sets out clear guidelines for activities involving crypto assets, such as crypto exchanges, investment advice and custody services. To ensure proper oversight, the Financial Market Commission (CMF) introduced General Rule No. 502 in early 2024. The rule requires financial services providers to register and obtain authorisation from the CMF. The Ley Fintec empowers the Central Bank of Chile to issue regulations, in order to ensure the security and reliability of the digital assets.
The introduction of the Ley Fintec is an important step in Chile’s history, especially when considering its financial landscape. The Chile Congress approved the law in October 2022, and it was enacted in January 2023. What makes the law special is the fact that it targets the modernisation of the country’s banking and payment sectors. Promoting financial innovation and inclusion is the strategy it proposes to achieve the targeted modernisation. The main aspect of the law is the introduction of an Open Financial System. What it says about fintech companies and cryptocurrencies is vital to understand, as it allows us to understand how the country sees these sectors. The law brings regulations for fintech companies and payment initiation service providers. This means that these companies and service providers must meet security and reliability standards.
In crypto, law is king or it can lead one to some real great trouble!
The Fintech Law categorizes crypto exchanges as alternative trading systems, requiring them to secure authorization from the Financial Market Commission to operate.
Recent developments in Chile’s crypto regulatory landscape include:
Let’s understand the crypto taxation framework in Chile.
Profits from crypto trading must be declared and are subject to the Global Complementary or Additional Tax.
Businesses must treat crypto profits as income, subject to taxes like the First Category Tax and the Global Complementary or Additional Tax.
Crypto service providers must charge Value Added Tax (VAT) on commissions and issue invoices accordingly.
Crypto exchanges have additional responsibilities, such as filing the Annual Affidavit No. 1891, detailing all trades and operations, and adhering to first-category taxpayer obligations.
Here is the timeline of Crypto Regulation Evolution in Chile.
In 2024, Chile is emerging as a leader in crypto regulation in Latin America. With new laws in place, the country aims to provide clarity and stability for digital asset ventures, fostering a robust environment for blockchain technology innovation. This not only benefits businesses but also fosters trust among investors, ultimately encouraging wider adoption of digital assets.
As Chile continues to refine its approach, the world will be watching with keen interest, eager to learn from this great example.
Also Read : Crypto Regulations in Canada: Key Updates for 2024
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