Brazil banks investigated for not serving crypto firms

Written by: Ali Raza
May 22, 2020
  • Banks of Brasil are currently under investigation as part of an old case from 2018, that was shelved in 2019.
  • The case was originally opened because Banco do Brasil shut down an account belonging to a crypto firm.
  • CADE decided to reopen the case in order to protect crypto businesses from being discriminated against banks.

Brazilian banks are being scrutinized for denying service to digital currency companies, as per new reports from local news sources. The sources reported that a number of banks are now being investigated after the Administrative Council of Economic Defense (CADE) recent vote.

Why did the banks deny service to crypto firms?

The vote was in favor of reopening the case against lenders who refused to provide services to crypto firms, and it is a continuation of a lawsuit filed back in 2018.

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The lawsuit was filed by ABCB (Associação Brasileira de Criptoativos e Blockchain), which is a blockchain firm based in Sao Paulo. It is a non-profit organization that sued Banco do Brasil for closing the account of a local crypto exchange, Atlas. The bank justified its move by calling it an ‘administrative decision.’

This is not an isolated incident, either. Many other Brazillian banks — many of which are major ones, such as Santander, Sicredi, Itau Unibanco, and Banco Inter — also refused to service crypto companies. Since the banks were unable to provide a valid reason for the refusal, it is treated as illicit.

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The reopening of the case

Unfortunately, the case was shelved in December 2019, as the banks claimed that there are no laws or regulations that made them obligated to provide service to anyone. Not only that, but they stressed that the crypto market is unregulated, and as such, it can be used for money laundering activities.

Six months later, the CADE just decided unanimously to reopen the case with the claim that there is no evidence to justify the service denial and account closing. CADE’s counsellor, Lenisa Rodrigues Prado commented on the move by stating that CADE needs to exercise its duty to avoid seeing independent brokers being pushed into a limbo of the financial system.

At the same time, local agencies like the Securities and Exchange Commission (CVM), the Federal Revenue Department (RFB), and the Financial Activities Control Council (COAF) are expected to participate in a new investigation.

As for Banco do Brasil, it admitted that it provided CADE with all the data that was requested. As such, it plans to be fully cooperative with the authorities.