Crypto-funded debit card in Chile

Ley N° 21.521 (Fintech Law):

Title: Marco para la modernización de la legislación financiera

Link (LeyChile): https://www.bcn.cl/leychile/navegar?idNorma=1189406

Note: This is the primary law. The CMF is currently developing the specific secondary regulations (normativa secundaria) that will detail the requirements for VASPs.

Comisión para el Mercado Financiero (CMF):

Official Website: https://www.cmfchile.cl/

The CMF has already published its specific regulations regarding VASPs under the Fintech Law, which is now in effect.

Deloitte Article: "Chile publishes its new Fintech Law: key takeaways" (January 2023) - English summary of the law.

Exchanges: Platforms facilitating the exchange between virtual assets and fiat currencies, or between one or more forms of virtual assets.

Custody Providers: Entities providing safekeeping or administration of virtual assets or instruments enabling control over virtual assets on behalf of natural or legal persons.

Payment Processors (Crypto-related): If they facilitate the transfer of VAs or stablecoins, or perform services similar to payment service providers using VAs, they would fall under the VASP definition. The law specifically includes "platforms that offer any type of payment initiation service."

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.

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.

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).

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.

UAF Circular N° 57 (Circular N°57 de la UAF): This is the most crucial piece of regulation for VASPs. Issued by the UAF, Circular N° 57 (published in October 2020) explicitly designates "Providers of Virtual Asset Services" (PSAV) as obligated entities under Law N° 19.913. This means VASPs must comply with all AML/CFT obligations applicable to other financial institutions.

Ley N° 19.913, que Crea la Unidad de Análisis Financiero y Modifica Diversas Disposiciones en Materia de Lavado y Blanqueo de Activos (Law N° 19.913, which Creates the Financial Analysis Unit and Modifies Various Provisions Regarding Asset Laundering and Blanqueo de Activos): This is the main AML/CFT law in Chile, establishing the UAF and defining the framework for preventing and prosecuting money laundering and terrorist financing.

Circular N° 49 de la UAF: Establishes general instructions on risk management and prevention of ML/FT for obligated entities, including policies, procedures, internal controls, and designated compliance officers.

Circular N° 50 de la UAF: Provides instructions for identifying Politically Exposed Persons (PEPs).

Circular N° 51 de la UAF: Establishes instructions regarding the detection and reporting of transactions related to terrorism financing and compliance with international sanctions lists.

Circular N° 52 de la UAF: Details instructions for conducting risk assessments for ML/FT.

Circular N° 58 de la UAF: Modifies and updates the instructions for reporting suspicious activities (ROS) and other information to the UAF.

Identification and Verification:

Individuals: Obtain and verify identity (e.g., full name, ID number, date of birth, nationality, address, contact information) using reliable, independent source documents, data, or information.

Legal Entities: Obtain and verify legal form, name, address, contact information, legal representative(s), and information on beneficial ownership.

Beneficial Ownership: Identify and verify the natural person(s) who ultimately own or control the customer, or the natural person(s) on whose behalf a transaction is being conducted.

Purpose and Nature of Business Relationship: Understand the purpose and intended nature of the business relationship or transaction.

Ongoing Monitoring: Continuously monitor the business relationship and transactions to ensure they are consistent with the VASP's knowledge of the customer, their business, and risk profile, including the source of funds.

Politically Exposed Persons (PEPs): Implement enhanced due diligence (EDD) measures for PEPs, including obtaining senior management approval for establishing business relationships and taking reasonable measures to establish the source of wealth and source of funds.

Risk-Based Approach: Apply CDD measures according to the level of risk associated with the customer, product, service, or geographic area. Higher risk scenarios require Enhanced Due Diligence (EDD).

Source of Funds/Wealth: For high-risk customers or transactions, VASPs must take reasonable measures to establish the source of funds and, where appropriate, the source of wealth.

Obligation to Report: VASPs are required to report any operation, transaction, business, or activity that they identify as unusual or suspicious, as well as any attempts to carry out such activities, regardless of the amount.

Exchange between virtual assets and fiat currencies.

Transfer of virtual assets.

Custody and/or administration of virtual assets or instruments enabling control over virtual assets.

Sale of Cryptocurrencies Themselves: The direct sale or transfer of cryptocurrencies (as intangible assets) is exempt from VAT (IVA). This is because they are not considered "goods" or "services" as defined in the Chilean VAT Law for tax purposes.

Goods or Services Paid with Crypto: While the crypto itself is VAT-exempt, if cryptocurrencies are used as a medium of exchange to pay for goods or services that are normally subject to VAT, then those goods or services will incur VAT as usual. The value for VAT purposes will be the fair market value of the goods/services in CLP at the time of the transaction.

Taxable Event: The positive difference between the sale price and the acquisition cost (cost basis) is considered a capital gain.

Tax Rate: These capital gains are integrated into the individual's global income and are subject to the Impuesto Global Complementario (Global Complementary Tax). This is a progressive personal income tax with rates ranging from 0% to 40% (as of 2024, rates are subject to annual adjustments).

Foreign Assets (Form 2897): If cryptocurrencies are held outside Chile and their value exceeds certain thresholds (currently US$50,000 equivalent), they must be reported on Form 2897 ("Declaración Jurada Anual sobre Inversiones en el Extranjero") as part of a general requirement to declare foreign assets.

Entity Targeted: General public, and implicitly, unregulated entities operating in the crypto space. Specific warnings target individual unregistered platforms. Violation Type: Operating outside regulatory oversight, potential for fraud or financial instability. The warnings themselves are preventative, not punitive. Penalty Amount: No direct penalties attached to a warning. Penalties would come from future enforcement actions under the new FinTech Law, once fully implemented.

Outcome: Increased public awareness about crypto risks. The FinTech Law now requires Virtual Asset Service Providers (VASPs) to register with the CMF and comply with various regulations (e.g., AML/CFT, consumer protection). This will enable direct regulatory enforcement actions in the future against non-compliant entities.

Chile's regulatory framework under Resolution 79/2025 imposes strict oversight and reporting obligations on digital marketplaces and payment facilitators, with punitive enforcement measures (e.g., anti-avoidance rules) to combat non-compliance, tax evasion, and fraud—not merely preventative warnings.

For the relevant Chilean offense, Article 161-A of the Chilean Penal Code establishes a fixed statutory penalty range: imprisonment of reclusión menor in any of its degrees plus a fine of 50 to 500 UTM, increased to reclusión menor in its maximum degree plus a fine of 100 to 500 UTM if the same person both obtains and discloses the material; penalties are therefore not left open-ended to generic criminal charges, asset freezes, and restitution alone but are set by law within these ranges.

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 the specific framework and mechanisms established by the 2023 Fintech Law. However, most fiat-backed stablecoins are designed to avoid this classification.

No Specific Rules: As of now, there are no specific rules explicitly addressing "algorithmic stablecoins" in Chile.

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.