Chile’s Political Realignment and Its Implications for Cryptocurrency: An Analytical Perspective
On December 14, 2025, Chile underwent a significant political transformation as José Antonio Kast, a conservative former congressman and the leader of the Republican Party, secured the presidency with approximately 58% of the electoral votes, defeating leftist candidate Jeannette Jara. This electoral outcome signals the most pronounced rightward shift in Chilean politics since the restoration of democracy in 1990. The financial markets responded favorably, interpreting this political pivot as an indicator of impending deregulation. Consequently, both the Chilean peso and equity markets exhibited gains amidst anticipations of relaxed labor regulations, reduced corporate taxation, and intensified law-and-order measures addressing crime and immigration issues that dominated the electoral discourse.
Kast’s ascent to La Moneda was propelled by public apprehensions regarding security and stagnant economic growth. His campaign articulated a dual commitment to “restore order” while simultaneously fostering private investment, particularly within the copper sector—a crucial component of Chile’s economy. Moreover, he adjusted his political rhetoric to appeal to center-right constituents in a fragmented Congress. While his immediate post-election rhetoric emphasized unity, the underlying political dynamics suggest a trajectory characterized by incrementalism.
The broader political context surrounding Kast’s victory raises pertinent questions regarding the future of cryptocurrency in Chile: Will this rightward political shift lead Chile down a path analogous to that of El Salvador under President Nayib Bukele, who famously made Bitcoin legal tender? The preliminary assessment indicates a resounding “no,” yet the more nuanced exploration unveils intriguing dynamics with global relevance.
Comparative Analysis: Chile Versus El Salvador
It is tempting to draw parallels between Chile and El Salvador’s respective approaches to cryptocurrency; however, such comparisons overlook critical distinctions in institutional frameworks and market structures. In 2021, President Bukele’s establishment of Bitcoin as legal tender represented an unprecedented top-down political maneuver that continues to influence international discourse on cryptocurrency adoption. In contrast, Chile’s potential trajectory appears poised to be more bottom-up and technocratic, driven primarily by legal stipulations and technical considerations rather than populist political decisions.
Three foundational factors delineate Chile’s unique position:
- The Central Bank’s Stance: The Banco Central de Chile (BCCh) has systematically distanced itself from cryptocurrency-related theatrics, opting instead for sober examination through comprehensive analyses of Central Bank Digital Currencies (CBDCs). Its implementation of the Fintech Act alongside the Financial Market Commission (CMF) underscores a cautious engagement with financial technology.
- Pension Funds’ Dominance: As of late 2024, Chile’s pension funds commanded assets totaling approximately $186.4 billion. By mid-2025, this figure ascended to over $207 billion, ultimately reaching approximately $229.6 billion by October 2025. This substantial asset pool operates under stringent governance frameworks that necessitate regulatory compliance before integrating new asset classes.
- Taxation Framework: Current tax regulations categorize cryptocurrency as an income-taxable asset, reinforcing an adoption model that emphasizes formal intermediaries—such as brokers and banks—rather than government mandates mandating usage at points of sale.
This macroeconomic backdrop elucidates why industry experts like Mauricio Di Bartolomeo, co-founder and Chief Strategy Officer of Bitcoin lending platform Ledn, assert that Chile’s “crypto moment” will diverge significantly from those observed in El Salvador or Argentina. Di Bartolomeo articulates skepticism regarding any immediate intentions by the Chilean Central Bank or government to declare Bitcoin legal tender.
“I believe it is unlikely that the Chilean Central Bank and the new government will make an attempt to make Bitcoin legal tender in the country,” he opines.
Instead, Di Bartolomeo envisions a gradual policy evolution aimed at normalizing cryptocurrency usage—potentially encompassing minimal tax relief for minor transactions and explicit permissions for banking institutions to provide custody and trading services.
Infrastructure Developments: ETFs and Banking Custody
The question arises: what initial developments can be anticipated within Chile’s financial landscape regarding cryptocurrency?
“Local ETF products that let regulated entities get exposure,” suggests Di Bartolomeo, drawing parallels with recent trends in spot Bitcoin Exchange-Traded Funds (ETFs) abroad.
The United States witnessed BlackRock’s iShares Bitcoin Trust (IBIT) commence trading in January 2024, rapidly transforming Bitcoin into a viable asset class for traditional institutional portfolios. Chile stands at a juncture where it need not reinvent existing frameworks; rather, it should adapt these models to local regulatory contexts.
The subsequent challenge lies in establishing robust banking infrastructure. A clear regulatory framework from both the central bank and CMF concerning bank-level custody will facilitate broader access for consumers and businesses alike. This encompasses brokerage integration, discretionary asset management portfolios, collateralized lending mechanisms, and corporate treasury programs capable of holding and hedging against cryptocurrency assets.
Chile has demonstrated a methodical approach toward constructing these frameworks through initiatives such as the Fintech Act (Law 21,521) and Open Finance System regulations established in mid-2024. These foundational elements empower banks to expand their service offerings without compromising risk management protocols.
Pensions: A Complex Challenge
A pivotal question remains: What role will pension funds (AFPs) play in this evolving landscape? Di Bartolomeo provides pragmatic insights into this complexity: pensions are governed by stringent regulations that often restrict direct investments in international funds or limit their capacity to hold non-domiciled assets.
This reality amplifies the significance of “jurisdictional opportunities.” If access to international spot ETFs is limited or prohibited, domestic ETFs or Exchange-Traded Notes (ETNs) could serve as transitional instruments enabling AFPs to gain exposure to cryptocurrencies.
However, any potential involvement would likely begin on a modest scale due to stringent custody standards, valuation methodologies, risk classifications, and tax implications—mundane yet crucial details that seldom dominate public discourse but are essential for institutional adoption.
The stakes are illustrated through numerical projections: with pensions already commanding over $229 billion by late 2025, even a modest allocation—ranging from 25 to 50 basis points—could represent billions in capital flow over time. However, regulatory bodies will undoubtedly impose rigorous requirements concerning custody segregation, pricing integrity, and liquidity stress-testing before permitting any movement.
Future Outlook: Catalysts and Constraints
If we establish baseline expectations that infrastructural developments will precede widespread adoption of cryptocurrencies in Chilean markets, it is vital to identify potential catalysts for acceleration or constraints hindering progress. Di Bartolomeo identifies three institutional deal-breakers:
- Central bank restrictions on domestic Bitcoin trading operations;
- Punitive taxation policies concerning Bitcoin investments;
- Limits on the utilization of USD-pegged stablecoins.
Each of these factors could compel market participants toward offshore alternatives or informal transaction channels—antithetical to Chile’s decade-long objective of enhancing market formalization. Conversely, catalysts include:
- Clear guidance on bank custody practices;
- Securities regulator approvals for local ETFs/ETNs;
- Defined compliance pathways facilitating distribution.
Early indicators suggest movement toward regulatory clarity: BCCh has published two reports on CBDCs (in 2022 and 2024), reflecting its preference for deliberate architectural development over headline-grabbing initiatives. Simultaneously, CMF is advancing a regulatory framework designed for implementation between 2025-26 while rolling out Open Finance rules initiated in 2024—this legal groundwork facilitates secure data interoperability and product innovation.
The Political Climate: Implications for Cryptocurrency Adoption
Kast’s election victory has garnered attention from conservative leaders across Latin America and led to early bilateral engagements with Argentina’s libertarian president Javier Milei—a context suggesting a deregulatory atmosphere conducive to market expansion. Yet it remains crucial to acknowledge that changes within the Chilean political system predominantly occur through institutional channels. Despite market optimism following Kast’s election result and a split Congress composition persisting post-election, initial policy implementations will likely be constrained by legislative deliberations rather than sweeping monetary transformations.
For those invested in observing the evolution of cryptocurrency within Chilean markets, Di Bartolomeo offers practical guidance on forthcoming indicators: The initial signals of progress are likely to manifest through filings related to local Bitcoin ETFs or ETNs followed closely by banks indicating readiness regarding custody capabilities.
This approach transcends mere spectacle; it aims at establishing practical pathways for mainstream adoption:
A definitive signal would emerge if banks commenced offering any Bitcoin-related services or products or if policy discussions arose concerning updates to banking regulations enabling such offerings.”
This strategic shift could normalize local transactions involving cryptocurrencies without engendering legal ambiguities. As attention subsequently shifts toward pensions, any regulatory clarifications expanding eligible asset classes would catalyze incremental exposure within these significant capital pools—especially if domestic wrappers facilitate operational simplicity.
On the retail front, carefully delineated tax relief measures could promote experimentation without imposing undue burdens on users. Di Bartolomeo highlights de minimis exemptions akin to those recently debated in U.S. legislation as a feasible model for fostering utilization of cryptocurrencies as payment mediums within Chilean commerce.
I would also advocate monitoring policies regarding USD-pegged stablecoins like Tether since their increasing adoption as currency alternatives could serve as conduits toward broader Bitcoin acceptance over time,” he asserts.
The trajectory of cryptocurrency integration within Chile is unlikely to be defined solely by high-profile announcements but rather through meticulous adjustments articulated within policy frameworks and custodial practices. While this may lack the sensationalism associated with El Salvador’s legal-tender declaration, it represents a scalable pathway characterized by systematic growth potential.
I do not foresee an immediate case for Bitcoin being utilized as currency within Chile,” concludes Di Bartolomeo succinctly.
The pivotal moment will hinge upon developments within banking institutions; should such advancements materialize first, engagement from pension funds may subsequently follow—and even minor reallocations could yield substantial impacts on capital flows within these substantial financial reservoirs.
