Chile -- Stablecoin Regulations Regulatory Overview

Chile is actively developing its regulatory framework for the fintech sector, including stablecoins, primarily through its comprehensive Fintech Law (Law 21.521). While specific stablecoin legislation is still emerging, the existing framework provides a strong foundation for their oversight.

Here's a breakdown of the regulatory landscape for stablecoins in Chile:

1. Classification of Stablecoins

Chile's Law 21.521 (Ley Fintech), published in January 2023, establishes a regulatory framework for various financial innovations, including services related to "crypto-assets" (activos digitales).

• Crypto-assets: Stablecoins are primarily classified as crypto-assets under Law 21.521. This law defines "crypto-assets" broadly as digital representations of value or rights that can be stored or transferred electronically using distributed ledger technology or similar.
• Not explicitly E-money/Payment Tokens/Securities:
  • E-money/Payment Tokens: The law does not explicitly classify stablecoins as "e-money" or "payment tokens" in a distinct category, but the services that involve them (e.g., acting as a means of payment) can fall under regulated "payment intermediation services" or "alternative transaction systems." If a stablecoin perfectly replicates the functions of fiat currency and is designed solely for payments, the CMF could interpret certain aspects through the lens of payment services.
  • Securities: A stablecoin could be classified as a security if its structure confers rights akin to those of traditional securities (e.g., profit-sharing, debt instruments, investment contracts). The CMF (Comisión para el Mercado Financiero) has the authority to assess this on a case-by-case basis under existing securities laws. However, most fiat-backed stablecoins are designed to avoid this classification.
• Crypto-Asset Service Providers (CASPs): The key approach is to regulate the services provided with crypto-assets. Any entity offering services related to stablecoins (e.g., exchange, custody, intermediation, advising) will be considered a Crypto-Asset Service Provider (CASP) and subject to the CMF's oversight.

Regulatory Reference:

• Ley Nº 21.521, de 2023, Ley Fintech: Establece el marco regulatorio aplicable a las empresas de tecnología financiera (Fintech).
  • URL: https://www.bcn.cl/leychile/navegar?idNorma=1189334 (Official BCN LexisNexis link)

2. Reserve Requirements

Law 21.521 mandates the CMF to establish specific requirements for Crypto-Asset Service Providers (CASPs). While the specific secondary regulations are still being developed by the CMF, it is widely anticipated that these will include robust requirements for stablecoins:

• Risk Management: CASPs dealing with stablecoins will be required to implement comprehensive risk management policies. For fiat-backed stablecoins, this will likely translate into requirements for the quality, segregation, and regular auditing of their backing assets.
• Asset Segregation: The law empowers the CMF to require the segregation of client assets from the CASP's own assets, which is critical for stablecoin reserves.
• Transparency and Disclosure: Detailed disclosure requirements about the backing assets, their custodians, and audit reports are expected to ensure the stability and transparency of stablecoins.
• Capital Requirements: CASPs will also be subject to minimum capital requirements, which implicitly supports the financial robustness needed to manage stablecoin operations and associated risks.

Current Status: These specific reserve requirements will be detailed in the secondary regulations to be issued by the CMF, which are currently under development.

Regulatory Reference:

• Ley Nº 21.521, Título III, Párrafo 1º, Artículo 41: "De los proveedores de servicios sobre activos digitales." This article grants the CMF the power to issue general rules on operational, capital, risk management, and information disclosure requirements for CASPs.
  • CMF Website: The CMF is the main financial regulator that will issue these secondary norms. You can monitor their official publications: https://www.cmfchile.cl/

3. Issuer Licensing

• Authorization/Registration with CMF: Entities providing "crypto-asset services" (which would include the issuance and management of stablecoins as part of a broader service like exchange or custody) will be required to apply for authorization or registration with the Comisión para el Mercado Financiero (CMF).
• Scope: This applies to any entity that offers the exchange, custody, intermediation, or other services involving crypto-assets, including stablecoins, to the public in Chile.
• Requirements: The licensing process will involve demonstrating compliance with requirements related to:
  • Corporate governance
  • Risk management
  • Operational capacity
  • Capital adequacy
  • Cybersecurity
  • Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) protocols (aligned with FATF recommendations).

Regulatory Reference:

• Ley Nº 21.521, Título I, Capítulo 1º, Artículo 2º and Título III: These sections outline the scope of regulated entities and the CMF's authorization powers.
  • URL: https://www.bcn.cl/leychile/navegar?idNorma=1189334

4. Redemption Rights

While Law 21.521 does not explicitly detail "redemption rights" specifically for stablecoins, the general principles of consumer protection, investor protection, and financial market integrity that the CMF is mandated to uphold strongly imply such rights for fiat-backed stablecoins.

• Transparency and Clear Terms: CASPs will be required to provide clear and comprehensive information to users regarding the nature of the stablecoin, its backing, and the terms and conditions for its acquisition and redemption.
• Safeguarding Client Assets: The CMF's forthcoming regulations on safeguarding client assets and operational resilience will implicitly support the expectation that users can redeem their fiat-backed stablecoins at par.
• CMF Oversight: Any failure by a licensed CASP to honor redemption claims for a fiat-backed stablecoin would likely fall under regulatory scrutiny and potential enforcement actions by the CMF.

Regulatory Reference:

• Ley Nº 21.521, Título III, Artículo 41: Empowers the CMF to establish rules to protect clients and ensure proper market functioning.

5. Algorithmic Stablecoin Rules

• No Specific Rules: As of now, there are no specific rules explicitly addressing "algorithmic stablecoins" in Chile.
• General Crypto-Asset Treatment: They would fall under the general definition of "crypto-assets" in Law 21.521 and be subject to the same CASP regulatory framework.
• Increased Scrutiny/Risk Assessment: However, due to their inherent volatility and reliance on complex algorithms rather than tangible reserves, algorithmic stablecoins would likely face heightened scrutiny from the CMF. They would be subject to much more stringent risk management, operational, and disclosure requirements.
• Potential Restrictions: Depending on the risk assessment, the CMF could potentially impose restrictions on their offering to retail investors, require specific risk warnings, or even limit their authorization if deemed to pose undue systemic risks or consumer protection concerns. Their non-collateralized nature means they would likely be considered higher risk than fiat-backed stablecoins.

6. CBDC Interaction

• Banco Central de Chile Research: The Banco Central de Chile (BCC) has been actively researching the feasibility and implications of issuing a Central Bank Digital Currency (CBDC). In 2022, the BCC published a report summarizing its findings and public consultation on the topic.
  • Report Title: "Resultados y Conclusiones del Estudio de Emisión de un Peso Digital en Chile" (Results and Conclusions of the Study on the Issuance of a Digital Peso in Chile).
  • URL: https://www.bcentral.cl/documents/20182/1004664/Estudio_Peso_Digital_Chile.pdf
• No Direct Regulatory Interaction (Yet): Currently, there is no direct regulatory interaction between a Chilean CBDC (which is still under study) and private stablecoins. A CBDC would be sovereign money, issued and backed by the Central Bank, operating as a distinct and risk-free digital form of the national currency.
• Potential Future Impact:
  • Reduced Demand for Private Stablecoins: A highly functional and accessible CBDC could potentially reduce the demand for private stablecoins for general payment purposes, especially if the CBDC offers similar benefits (e.g., instant settlement, programmability) with sovereign backing.
  • Risk Anchor: A CBDC could serve as a risk-free digital anchor for the financial system, providing a stable base against which private stablecoins could be benchmarked or even built upon (e.g., using CBDC as collateral).
  • Complementary Roles: It is also possible that CBDC and stablecoins could coexist, with stablecoins serving specific niches (e.g., cross-border payments, specific DeFi applications) that a CBDC might not fully address.
  • Regulatory Influence: The BCC's research and any eventual CBDC implementation would likely inform and potentially influence the CMF's ongoing regulation of private stablecoins, particularly concerning interoperability, stability, and consumer protection standards.

In summary, Chile's regulatory framework for stablecoins is evolving, with Law 21.521 laying the groundwork by classifying them as "crypto-assets" and regulating entities that provide services related to them as CASPs. The specifics regarding reserve requirements, detailed licensing procedures, and clear redemption rights will emerge as the CMF issues secondary regulations, which are eagerly anticipated by the market. The Central Bank's ongoing CBDC research adds another layer of potential future development to the digital currency landscape in Chile.