Brazil: Authorities Investigating Banks that Close Crypto Exchange Accounts
The Administrative Council for Economic Defense (CADE), Brazil’s antitrust watchdog, elected to revisit the probing of some banks who closed the bank accounts belonging to local crypto exchanges.
Antitrust Agency Probes Banks’ Closure of Crypto Exchange Accounts
According to a report by Finance Magnate on Thursday (May 21, 2020) the CADE moved to continue its probe into six major Brazilian banks who abruptly stopped offering financial services to crypto exchanges. The banks under investigation include Banco Santander, Itaú Unibanco, Branco Bradesco, Sicredi, Branco do Brasil, and Inter.
In Brazil, the relationship between banks and local virtual currency exchanges have been at loggerheads, coupled with the fact that there are no robust crypto regulations in the Latin American country. A report by BTCManager back in January 2018 revealed how banking institutions in Brazil were closing accounts of different crypto-related businesses.
Exchange platforms such as Mercado Bitcoin, Foxbit, and CoinBR were affected and no longer had access to financial services. Consequently, all three companies filed lawsuits to challenge the banks’ actions.
In September of the same year, Brazil’s antitrust agency launched an investigation into the account closures. While crypto exchanges and brokerages saw the banks’ action as arbitrary, the financial institutions, on the other hand, argued that they closed the accounts as a preventive measure, to avoid cases of money laundering and other illicit activities.
The situation in Brazil is similar to what happened in India. The Reserve Bank of India (RBI) banned commercial banks in the country from offering services to virtual currency businesses. However, the crypto community decided to challenge the RBI’s directive in court, with the Supreme court delivering a landmark ruling in favor of the exchanges in March 2020.
With the investigations reopened, the banking institutions involved and digital currency exchanges in the country wait to see on whose side the pendulum will swing. If the banks’ actions were found to be arbitrary, they could be sanctioned and instructed to resume financial services for crypto exchanges.
Harsh Crypto Climate in Brazil
The cryptocurrency market in Brazil is one of the most thriving in the whole of South America. However, the absence of clear-cut crypto regulations and stringent crypto tax rules is threatening to cripple the industry.
In August 2019, the country made it mandatory for Brazilians and cryptocurrency exchange platforms to provide information on crypto transactions to the country’s tax authorities. Failure to abide by the disclosing rule attracted hefty penalties. Furthermore, Brazil’s harsh crypto tax rules have seen exchanges such as Xdex and Acesso Bitcoin closing down their businesses.
