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Brazil is investigating banks that refuse to service cryptocurrency companies

May 21, 2020

Brazilian banks that have refused to service cryptocurrency companies are currently under investigation by local authorities., according to a recent report by Folha de São Paulo.

On May 20, the Board of Directors for Economic Defense or CADE voted to resume proceedings against local lenders who have reportedly refused to work with cryptocurrency companies. The lawsuit was originally filed in 2018 by Associação Brasileira de Criptoativos e Blockchain or ABCB, a non-profit blockchain organization based in Sao Paulo, after Banco do Brasil closed the Atlas cryptocurrency exchange account citing a “decision” administrative “.

The bill mentions several other major Brazilian banks, namely Santander, Itaú Unibanco, Sicredi and Banco Inter. also accuses her of illegally refusing to serve.

Brazil is investigating banks that refuse to service cryptocurrency companies
Brazil is investigating banks that refuse to service cryptocurrency companies

The case was closed in December 2019 after defended banks claimed that there were no central bank regulations that forced them to provide services while the cryptocurrency market was unregulated and therefore vulnerable to money laundering activities.

Now, CADE has unanimously decided to resume the investigation, arguing that “no reasonable evidence has been provided” to justify the closure of accounts and the denial of services. The adviser to the supervisory body Lenisa Rodrigues Prado is quoted as saying:

“To avoid the risk of pushing independent cryptocurrency brokers into the ‘limbo’ of the financial system (which could increase the risk of money laundering), CADE must exercise its duty to protect competition in this emerging market.”

Other local agencies such as the Securities and Exchange Commission or CVM, the Financial Activities Control Board or COAF and the Department of Federal Revenue or RFB are expected to do so participate in the new research.

According to Folha de São Paulo, Banco do Brasil has already stated that it has provided CADE with all the information requested and will fully cooperate with the authorities. According to reports Other banks declined to comment.

Cryptocurrency regulation in Brazil

Cryptocurrencies in Brazil remain largely unregulated. In February 2020, however, Cointelegraph Brazil reported that two major cryptocurrency exchanges were closed following the threat of heavy fines due to tax reform.

Apparently, All cryptocurrency trading platforms in the country fall within the scope of Normative Instruction No. 1888 issued by the RFB. This forces them to report all transactions or to impose fines between BRD 500 and BRD 1,500 (USD 120 to USD 360).