The Central Bank of Chile (BCC) believes that cryptocurrencies are unable to substitute traditional money, according to an in-depth report on crypto issued Feb. 7.

The document, signed by the central bank’s president Mario Marcel, was prepared upon request of the Tribunal de Defensa de la Libre Competencia (TDLC). The TDLC is an independent anti-monopoly institution established to ensure that free competition rules are not violated in Chile. The organization actively participated in a recent legal battle between Latin American crypto exchanges and Chilean banks.

As per the BCC, Bitcoin (BTC) and other major cryptocurrencies that were created as alternatives to fiat money, are now at an early stage of development. Therefore, it is difficult to predict whether or not they will continue to evolve. However, the BCC itself remains sceptical about the future of the industry:

“Currently, there is no evidence that would allow the conclusion that Bitcoin, or any other crypto asset, or crypto assets in general, will substitute legal currencies. [...] To achieve that goal, relevant legislative framework and regulation have to be adopted.”

The report also mentions volatility, limited acceptance and slow payments processing as the key obstacles to the mass adoption of crypto. Regarding statistics on businesses that accept crypto as payment in Chile, BCC stated that the crypto market in the country is “negligible” in comparison to the traditional one.

The document also hints at a possible approach to crypto regulation in Chile. According to the BCC, cryptocurrencies might be treated as intangible assets and a digital representation of value, which converts them into property. In that case, they could be used as a medium of exchange to purchase goods and services without any additional restrictions.

The BCC report comes almost a year after the case involving local crypto exchanges Buda, CryptoMkt and Orionx began. The three firms started a legal battle in April, soon after their banking accounts were closed by several Chilean banks. The antimonopoly court managed to grant protection to the exchanges, despite the Supreme Court’s ruling to keep the accounts closed.

Chile has not yet introduced clear legal framework for regulating cryptocurrency. However, the government seeks to control crypto profits. This January, the Chilean Internal Revenue Service obliged taxpayers to mention crypto gains when they calculate annual income tax, given that crypto falls under the definition of intangible assets.