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Brazilian banks back on rack over crypto firm account closures

Brazil’s antitrust regulator revives 2018 investigation into the suspension of cryptocurrency exchanges' accounts by six leading banks

Brazil crypto

Brazil’s antitrust regulator, the Administrative Council for Economic Defence (CADE), has voted to revive its probe into the closure of accounts belonging to cryptocurrency exchanges by six of the nation’s leading banks.

The investigation has worn on since 2018, when accounts belonging to crypto companies were suspended without explanation, warning, or an appeal process.

In recent years, Brazil has become the cryptocurrency hub in Latin America. More and more of the country’s vendors have begun to accept crypto payments, while everyday Brazilians have been attracted to the likes of Bitcoin (BTC) and Ethereum (ETH) as a potential store of value and interesting investment opportunity. Brazilian crypto firms now generate the largest turnover in the entire region.

The Brazilian banks’ espoused justifications were concerns about the source of funds, money laundering and the legitimacy of some businesses. However, some have theorised that banking establishment wariness over the growth of this alternative financial world may have provided a greater motivation.

The results of the first investigation have not yet been published, however CADE has accused Brazil’s largest banks of “imposing restrictions or even prohibiting access to the financial system by cryptocurrency brokerages”.

Among the institutions in the firing line are: Banco Santander Brasil SA, Itaú Unibanco Holding SA, Banco do Brasil SA, Sicredi, Banco Bradesco SA, and Banco Inter.

The latest development underlines the fact that the Brazilian authorities continue to walk the line between regulation and development where cryptocurrencies are concerned.

While it may move to ensure banks do not hinder this emerging sector, the attitude of the Brazilian state is not absolutely laissez-faire. In 2019, the country’s parliament established a commission to investigate how to proceed with cryptocurrency regulation and introduced legislation which requires Brazilian crypto exchanges to provide client data to authorities, without any chance of appeal.

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