Chile has made a strong turnaround. Within the decisive run-off election on December 14, conservative former congressman and Republican chief Jose Antonio Casto received the presidential election with about 58% of the vote, beating leftist Janet Jara.
This marks the sharpest shift to the suitable since Chile returned to democracy. The market took this as a sign for deregulation. The peso and shares rose on hopes for loosening labor guidelines, decrease company taxes and selling legislation and order towards the crime and immigration pressures that dominated the marketing campaign.
Mr. Casto’s path to La Moneda ran straight by way of public fears about safety and stagnant development. His platform mixed a pledge to “restore order” with a pledge to revive non-public funding, significantly in copper.
He additionally toned down a few of his earlier marketing campaign efforts to curry favor with centre-right voters in a divided parliament. Whereas the message instantly following the election was one in all unity, the political calculations going ahead recommend gradualism.
Nonetheless, Mr. Casto campaigned within the regional shadow of leaders who constructed their manufacturers on rhetoric of safety and deregulation. He overtly cited El Salvador’s Nayib Boucle as a mannequin for crime, and the comparability to his “robust on crime” governance resonated with Chileans pissed off by the impression of organized crime and immigration.
Argentina’s liberal President Javier Millay instantly met with Mr. Casto in Buenos Aires a number of days after the vote, a snapshot of ideological unity throughout the Andes. Nonetheless, every family faces completely different constraints.
This political background naturally raises questions on digital currencies. Will a shift to the suitable put Chile on the trail of Bitcoin’s Boucle?
The easy reply given Chile’s establishments and market construction is not any. Longer solutions are extra fascinating and extra globally related.
Chile is just not El Salvador, and that is the purpose.
I wish to examine it to El Salvador. In 2021, President Nayib Bukele launched Bitcoin as authorized tender. It was the primary political assertion of its form that also makes headlines.
It doesn’t matter what you consider the end result, the transfer was top-down and symbolic. Chile’s path is more likely to be bottom-up and technocratic, pushed extra by authorized and technological constraints than by politics.
Three anchors make Chili completely different. First, the central financial institution (BCCh) has been doing the alternative of the crypto theater lately.
It printed a sober CBDC evaluation and launched the open finance regime of the FinTech Act in parallel with the Monetary Markets Fee (CMF). This sort of effort is just not a sudden ploy to make cryptocurrencies authorized tender, however an indication of warning.
Second, pension plans tower over the regional market. By the tip of 2024, Chile’s pension funds held $186.4 billion.
By mid-2025, that quantity had exceeded $207 billion. By October, it had reached about $229.6 billion.
This equates to $229.6 billion in belongings that may solely transfer if you happen to examine the bins for governance, threat, custody, and valuation. It is a system that absorbs new asset courses by way of regulated wrappers, not presidential tweets.
Third, Chile’s tax and compliance rules already deal with digital currencies like revenue taxable belongings. This reinforces the concept adoption will happen by way of formal intermediaries (brokers, funds, banks) fairly than being mandated at checkout counters.
That is the macro background. That’s why Mauricio Di Bartolomeo, co-founder and CSO of Bitcoin lender Redon, believes Chile’s “crypto second” is just not like El Salvador or Argentina.
“I feel it’s unlikely that Chile’s central financial institution and the brand new authorities will attempt to make Bitcoin authorized tender within the nation,” he says.
Extra applicable, in his view, is an incremental coverage that normalizes utilization. This might embody minimal tax reduction for small-value transactions and clear permissions for banks to supply custodial and shopping for and promoting providers.
The aim is to permit residents and companies to carry BTC domestically with out authorized ambiguity.
Comply with the rails: ETFs, financial institution custody, and (ultimately) pensions
So what’s the very first thing that seems on earth?
“It’s a home ETF product that provides publicity to regulated firms,” Di Bartolomeo mentioned, pointing to the abroad wave of spot Bitcoin ETFs as a template.
Within the US, BlackRock’s iShares Bitcoin Belief (IBIT) started buying and selling in January 2024, rapidly turning the asset into portfolio-grade publicity for conventional monetary establishments. Chile does not have to reinvent the wheel. I have to convert it to an area wrapper and distribution.
From there, the gate component is the financial institution rail. Routine entry turns into attainable as soon as central banks and CMFs set up a transparent set of permissions for bank-level custody and facilitation.
This consists of brokerage consolidation, discretionary portfolio sleeves, secured loans, and company finance applications that may be held and hedged.
Chile has systematically labored in direction of constructing these frameworks by way of the FinTech Legislation (Legislation 21,521) and the Open Finance System Regulation, printed in mid-2024. This basis permits banks so as to add new providers with out breaking threat controls.
However what in regards to the elephant within the room, pensions (AFP)? Di Bartolomeo’s view is lifelike. Pensions are rule-bound devices, typically prohibiting direct purchases of worldwide funds or limiting how belongings not domiciled in Chile might be held.
That is why “alternative for trial” is so essential. He mentioned home ETFs and ETNs might be the bridge AFP wants if worldwide spot ETF models develop into off-limits.
Even then, sizing is restricted by storage requirements, valuation strategies, threat buckets, and tax therapy, and begins small. These are mundane, make-or-break particulars that hardly ever make headlines.
The numbers point out the stake. The pension system, which resulted in 2024 at $186.4 billion and continued to develop by way of 2025, does not have to make a lot of a transfer.
A 25-50 bps sleeve by way of an area wrapper represents billions of {dollars} in potential flows over the long run. However it additionally means regulators would require storage segregation, integrity of value sources, and stress-testable liquidity earlier than the primary foundation factors transfer.
Chile’s stance on stablecoins additionally suits into this “regulated rail” idea. This 12 months’s authorized evaluation highlights how fintech authorized frameworks can acknowledge the usage of stablecoins and incorporate them into formal techniques.
It is a prudent method that reduces the chance of casual dollarization whereas sustaining financial management. We anticipate to see an acceleration of retail-grade adoption within the close to time period.
Catalysts, deal killers, and memorable scoreboards
If the bottom case is rail first, what’s going to pace it up or cease it? Di Bartolomeo’s largest commerce killers are institutional: (1) central financial institution restrictions on home BTC shopping for and promoting, (2) punitive taxation of BTC investments, and (3) restrictions on the usage of stablecoins pegged to the US greenback.
Every will push actions abroad and into the shadows, a reversal of Chile’s decade-long undertaking to deepen and formalize the market.
However, the set off is easy. Steerage on financial institution custody, inexperienced mild for native ETFs/ETNs from securities regulators, and clear compliance channels for distribution.
There’s already motion on the coverage scoreboard. BCCh has launched two CBDC stories (2022 and 2024), proof that central banks favor intentional structure over headline-grabbing experimentation.
The CMF is implementing its regulatory plan for 2025-26 and is rolling out open finance guidelines from 2024. It’s a authorized framework that permits safe and interoperable information sharing, and thus new merchandise.
None of them might be mentioned to be “authorized tender”.
And what about politics? Casto’s victory, which was welcomed by conservatives within the area and adopted an preliminary bilateral settlement with Argentina’s liberal President Javier Millei, created an environment of deregulation.
Nevertheless, Chile’s establishments nonetheless drive change by way of establishments. Markets rallied after the outcomes, however Congress stays divided, and the primary 100 days will probably be decided by how far the federal government can push for extra rule-making fairly than full-scale monetary experimentation.
For these investing in the way forward for Chile’s cryptocurrencies, Di Bartolomeo’s recommendation is refreshingly validating. The primary trace will possible be an software for an area Bitcoin ETF or ETN, adopted in fast succession by banks indicating their intent for custody and fundamental shopping for and promoting capabilities.
He insists that this isn’t theatrical, however to permit for a traditional entrance.
“Coverage discussions about banks providing Bitcoin-related providers and merchandise, or updates to banking insurance policies that enable this, will probably be a powerful sign to encourage broader adoption.”
He believes this alteration might normalize native possession and buying and selling with out ambiguity. From there, the main focus shifts to pensions.
Circulars that merely develop the menu of eligible belongings or make clear the valuation and custody requirements for digital belongings might open the door to small-scale, testable publicity inside Chile’s largest pool of capital, particularly if home wrappers make entry operationally simpler.
In retail and commerce, slender tax cuts would assist experiment with out forcing them. Di Bartolomeo cited a de minimis-style exemption for small funds, already being mentioned in the USA, as a mannequin Chile might undertake to permit individuals to make use of and obtain Bitcoin for funds.
He additionally flags stablecoins as a viable coverage instrument.
“We may also contemplate insurance policies round the usage of stablecoins pegged to the US greenback, resembling Tether, as these are more and more getting used as currencies within the area,” he mentioned, including that over time customers might develop into extra concentrated in Bitcoin.
The way forward for cryptocurrencies in Chile will possible be determined not by podiums however by time period sheets, rulebooks, and custody audits. This is not as sizzling of a deal as El Salvador’s introduction of a fiat foreign money, however it’s a possible path to scale.
Di Bartolomeo mentioned:
“I feel it’s unlikely that Bitcoin will probably be used as a foreign money in Chile instantly.”
The financial institution will let you know. If that occurs, pension funds might be delayed and it would not take as many foundation factors to alter coverage.