Chile Introduces Comprehensive Crypto Framework With 2023 Fintech Law

Chile has positioned itself as a progressive jurisdiction in the realm of cryptocurrency regulation, balancing innovation with stringent consumer protection measures. The 2023 Fintech Law (Law No. 21 521) explicitly recognizes crypto-assets, signaling the country's willingness to embrace digital finance while ensuring robust safeguards. This regulatory framework mandates that exchanges, investors, and start-ups must comply with licensing requirements to avoid closure and penalties, thereby facilitating a structured entry into the market and fostering relationships with banks.

The regulatory policy in Chile is overseen by three key authorities: the Financial Market Commission (CMF), the Central Bank of Chile (BCCh), and the Servicio de Impuestos Internos (SII). The CMF is responsible for licensing providers, the BCCh issues prudential regulations and explores the potential of a Central Bank Digital Currency (CBDC), and the SII determines tax policies. Together, these entities aim to promote innovation, protect users, and maintain macroeconomic stability.

Historically, Chile's stance on cryptocurrency has evolved significantly. In 2016, the CMF declared that Bitcoin was beyond the scope of securities law and considered it a private means of exchange. In 2018, the Central Bank issued a memo cautioning about the volatility and anti-money laundering (AML) risks associated with crypto. This led to legal disputes, such as the Supreme Court's support for BancoEstado's decision to close a crypto exchange's account due to money-laundering concerns. However, the tide turned in 2023 with the passage of the Fintech Law, which introduced a specific category for "crypto-assets" and mandated registration. Subsequent milestones, including General Rule 502 and Circular No. 62, reflect a transition to a more structured, technology-neutral framework that balances growth with systemic safeguards.

The regulatory framework in Chile is comprehensive and involves several key authorities. The CMF maintains the Registry of Financial Service Providers, issues licenses, and monitors exchanges, custodians, brokers, and advisers. The BCCh sets prudential standards for stablecoins, considers authorizing means-of-payment tokens, and leads CBDC research. The SII interprets tax law and provides annual crypto filing requirements. Every crypto service, including exchanges, custody, brokerage, order routing, and investment advice, must be registered with the CMF and obtain operating authorization by February 3, 2025. The registration process includes a six-month substantive review covering solvency, governance, cybersecurity, client-asset segregation, and minimum equity.

AML/KYC procedures are stringent in Chile. Registered providers must conduct complete Know Your Customer (KYC) and beneficial-owner due diligence, perform risk-based monitoring, submit suspicious-activity reports to the Unidad de Analisis Financiero (UAF), and have compliance and crime-prevention officers. Taxation on crypto gains is treated as ordinary income, with progressive rates ranging from 0% to 40% for individuals and 27% for companies. Commissions on trades are subject to 19% Value Added Tax (VAT), and mining revenue is taxed as business revenue without capital-gains exemptions.

Token offerings in Chile are not regulated unless the token constitutes a security, in which case securities and prospectus regulations apply. The BCCh is developing stablecoin criteria for use as payment tools, and Initial Coin Offering (ICO) utility tokens are not yet covered by specific legislation but must not be promoted misleadingly to avoid sanctions from the CMF. Crypto payments are legal with consent but are not legal tender. The Fintech Law anticipates stablecoins becoming part of the national payments system after the issuance of BCCh standards. Mining is legal and subject to taxation, with no specific energy surcharges but compliance with general environmental and consumer-price-index regulations.

The Central Bank's proof-of-concept for the Digital Peso entered a pilot phase in April 2024. Public-private groups are experimenting with blockchain to settle bonds and modernize land registries. Unlicensed operation of service provision after February 2025 may result in daily penalties and compulsory closure of accounts. Violations of AML regulations can lead to fines of up to 1,000 UF (~USD 40,000) and criminal liability. The Fintech Law incorporates an Open Finance System, requiring banks to share customer data through APIs, and a limited-scope pilot regime run by the CMF enables fintechs to test products with less stringent capital rules.

The adoption of cryptocurrency in Chile is increasing, with local platforms like Buda.com having 500,000 registrants and Mercado Pago providing retail buy-and-hold services. Big box retailers accept crypto gift cards, and a spot Bitcoin ETF was listed on the Santiago Stock Exchange in July 2024. The government sponsors blockchain experiments in trade finance and e-invoicing, indicating a practical, technology-optimistic attitude. However, there are grey areas in regulation, such as lending/borrowing, DeFi protocols, and yield products, which lack clear guidelines. The tax and consumer claims are uncertain due to conflicting court judgments on crypto, and enforcement is resource-intensive due to cross-border platforms and anonymized wallets.

Recent developments include Circular 62 (2025) increasing KYC thresholds, the CMF launching a consultation on yield-bearing products, and the second CBDC report by BCCh establishing wholesale-retail interoperability. By 2026, Chile may see elaborate stablecoin regulations and the expansion of licensing to lending and staking activities. Tax authorities may add pre-filled crypto sections to annual returns, following Brazil's example. Chile's licensing route may attract exchanges from unregulated Latin markets, making Santiago a compliance center of the Southern Cone. Alignment with FATF and BIS guidance could facilitate cross-border payments and DeFi experimentation regionally.

In conclusion, Chile has introduced one of the most comprehensive crypto frameworks in Latin America, open to innovation but tough on compliance. The existence of clear licensing, defined AML regulations, and the prospect of a CBDC suggest a future where digital assets can coexist with a healthy banking system. Investors and founders must monitor CMF circulars and BCCh consultations, as the rulebook is growing rapidly and early implementation will be a competitive advantage.