Kast and the radicals of Chile: the mathematics of the pension system that slows down Bitcoin

Bitcoiners looking at Kast and the Chilean political shift imagine a new frontier similar to El Salvador. But there is a number telling a very different story: $229.6 billion. It’s no coincidence that this figure will decide the future of crypto in Chile more than any radical speech from the new government. The structural math of the Chilean pension system is not political rhetoric; it’s a constraint that redefines how the country will adopt Bitcoin.

By December 2024, José Antonio Kast had won the Chilean presidency with 58% of the vote, representing the most decisive rightward shift since the restoration of democracy. Markets interpreted the result as a signal of deregulation: flexible labor laws, tax cuts, public order. Kast’s rhetoric sounds radical. He invoked Nayib Bukele’s model in El Salvador in the fight against organized crime, and shortly after, he met Javier Milei in Argentina, reinforcing the image of a South American ideological alignment around conservative and libertarian policies.

Yet, the Chilean system does not respond to tweets. It responds to the central bank, supervisory commissions, and custody rules. And above all, it responds to numbers.

$229.6 billion: when math governs crypto policy

The number transforming every discussion about possible Chilean Bitcoin adoption is the assets under management (AUM) of Chilean pension funds (AFP). At the end of 2024, they managed $186.4 billion. Six months later, the figure exceeded $207 billion. By October 2025, it reached approximately $229.6 billion. This is not an insignificant statistic. It’s proof that any radical crypto policy will have to go through a system of assets heavily constrained by governance obligations, risk management, segregated custody, and standardized valuation.

Mauricio Di Bartolomeo, co-founder and Chief Strategy Officer of Bitcoin lender Ledn, explained the mechanism clearly: “This is not a system that absorbs new asset classes through presidential decree. It’s a system that requires regulated vehicles, compliance, and audits.” The value must move slowly and intentionally. The mathematics of pension capital flows leaves no room for improvisation.

For each basis point (0.01%) of Bitcoin exposure that AFPs desire, it would mean billions over time. But that same calculation shows why central banks and supervisory authorities want clarity on custody mechanisms, price sources, and tested liquidity before allowing the movement of even a single cent.

Radical rhetoric meets regulated infrastructure

Kast’s victory has sparked speculation about an official Bitcoin adoption similar to what El Salvador did. But the two countries operate in different worlds. In 2021, El Salvador adopted Bitcoin as legal tender through a charismatic decree from the top down—a declaration of intent. Chile, on the other hand, is building from the bottom up, through formal intermediaries (banks, brokers, funds), not through proclamations.

There are three structural reasons for this difference.

First: Chile’s Central Bank (BCCh) in recent years has done the opposite of crypto theatrics. It published sober analyses on central bank digital currencies (CBDCs) in 2022 and again in 2024. It implemented the open finance regime envisioned by the Fintech Law alongside the Financial Market Commission (CMF). These are not gestures of an institution prone to radical monetary surprises. They are gestures of a central bank that prefers thoughtful architecture.

Second: the pension system dominates the local market. When $229.6 billion are idle awaiting new asset classes, managers will want regulatory certainty and evaluation standards, not experiments.

Third: Chilean tax rules already treat crypto as assets subject to income tax. There’s no room for improvisation: adoption will happen through formal intermediaries with full traceability, not through transfers at the edge of legality.

The political shift sets the tone for deregulation. But the Chilean Congress remains divided. The first 100 days of Kast’s government will be defined by what it manages to pass through the regulatory process, not by monetary experiments.

From El Salvador to Chile: why bottom-up makes sense

If legal tender isn’t the way, what is? Di Bartolomeo offers a pragmatic and verifiable answer: “It’s highly unlikely that the Chilean Central Bank and the new government will attempt to make Bitcoin legal tender in the country. The best solution is an incremental policy update that normalizes use through ordinary channels.”

The first step will likely be the simplest and most important: local Bitcoin ETF products.

The U.S. has provided the model. BlackRock’s iShares Bitcoin Trust (IBIT) began trading in January 2024 and quickly made Bitcoin an institutional exposure for traditional institutions. Chile doesn’t need to reinvent anything. It needs to adapt the model into local vehicles and distribution.

From there, the enabling element is banking infrastructure. If BCCh and CMF establish a clear framework for custody at the banking level and facilitate transfers, daily access will follow naturally. This includes integration with brokers, discretized wallets, collateralized loans, and corporate treasury programs.

Chile has already demonstrated methodical building of these frameworks. The Fintech Law (Law 21,521) enacted in 2024 and the subsequent regulation on the Open Finance System provide the legal foundations that allow banks to add new services without compromising risk controls.

Signals to watch: ETFs, banks, and the role of pensions

The indicators to observe are threefold.

First: formal requests for local Bitcoin ETFs or traded instruments (ETNs). If authorities approve these products, it signals that Chile is normalizing access. Banks that show intent to offer custody and trading services for Bitcoin will be the second indicator. Nothing spectacular, but everything needed.

Second: regulatory clarity on dollar-pegged stablecoins. The Fintech Law framework already foresees recognition of these instruments within the formal system. If explicit communications from regulators accelerate retail access channels, this will reduce pressure for informal dollarization while maintaining the Central Bank’s monetary control.

Third: the most symbolic but significant move—the opening of pension systems. Any circular expanding the list of eligible assets or clearly standardizing valuation and custody criteria for digital assets would open the door to initial, tested exposure quotas within Chile’s largest capital pool. Even a small share (25–50 basis points) of the $229.6 billion would represent billions in flows over time. But this will only happen once custody standards are verified and liquidity tested.

The catalysts are technical: guidelines on bank custody, regulatory approval for local ETFs/ETNs, and explicit compliance pathways for distribution. The obstacles are equally identifiable: potential restrictions from the central bank on domestic Bitcoin trading, punitive tax treatment on crypto investments, or bans on dollar-pegged stablecoins. Each would push activity abroad or into shadow markets—precisely what Chile has been trying to avoid after a decade of working to deepen and formalize its markets.

The data Chile already knows

Math doesn’t lie. A growing pension system, a prudent central bank, a regulatory framework already in implementation: these are Chile’s radicals, the true structural radicals. They are not Kast’s words but the numbers of the system.

Chile’s crypto future will not be decided on a podium or in an editorial. It will be decided in term sheets, custody audits, and supervisory circulars. It will be decided, in other words, by the mathematics of capital flows and the infrastructure that enables them. It’s not as glamorous as legal tender, but it’s a scalable path that could teach something to countries beyond the Andes. As Di Bartolomeo notes: “An immediate scenario where Bitcoin acts as money in Chile is not realistic. Signals will come from banks. If it happens, pensions will follow. And it won’t take much to make a real difference.”

The lesson Chile is learning is simple: verbal radicals are easy. The radical mathematics of financial structure is what really matters.