Brazil’s Administrative Council for Economic Defense (CADE), the country’s antitrust watchdog, has recently sent 10 cryptocurrency exchanges and an OTC trading desk a questionnaire they have to answer by October 19, or face a fine that’ll go up to $25,000.
According to local news outlet Portal do Bitcoin, the questionnaire was sent on October 1, and follows an investigation reportedly requested back in June by the Brazilian Association for Cryptocurrency and Blockchain (ABCB), into the country’s financial institutions’ attitudes toward crypto-related businesses.
As CCN covered, CADE probed the country’s banks earlier this year for allegedly purposefully harming cryptocurrency exchanges by restricting their operations. Its investigation aimed to find out whether the financial institutions abused their position. This as the regulator at the time stated they were “imposing, restricting or even prohibiting… access to the financial system for cryptocurrency brokerages.”
Now, per Portal do Bitcoin, it’s time for the country’s exchanges to respond to the regulator. The questionnaire was sent to top exchanges, including Waltime, Brazilex, BitcoinTrade, Mercado Bitcoin, Foxbit, and more.
These were asked to reveal who will be replying to the questionnaire so the regulator can contact the person, as well as details about their operations. In its document, CADE notes exchanges that refuse to answer will be fined. It reads:
“In accordance with art. 40 of the Law 12,529 / 2011, the refusal, omission or unjustified delay of the requested information or documents constitutes an offense punishable by a daily fine of R $ 5,000.00 (five thousand reais) [about $1,270], and may be increased by up to twenty (20) times, if necessary to ensure its effectiveness, because of the economic situation of the offender. "
According to the questionnaire, published by the local news outlet, the regulator first asks cryptocurrency exchanges to present their business and to “briefly describe” their operations in Brazil. Then, through 10 questions, it digs deeper.
In these, CADE questions whether the exchanges have had their bank accounts shut down, or if they’ve been refused banking services. If so, the regulator asks whether they suffered losses because of it.
As some would expect, it also probes the exchanges’ attitudes toward illicit activites. The regulator asks them to explain in detail what measures they’ve adopted to prevent money laundering, terrorism financing, or organized crime. It also asks their they know-your-customer (KYC) checks and whether they’ve refused to serve clients before.
Per Portal do Bitcoin, one of the motives local banks used to shut down the exchanges’ accounts was their lack of a National Classification of Economic Activity (CNAE). Taking this into account, CADE is also using the questionnaire to get crypto exchanges to clarify what they declared was “their main activity to banks, when requesting the opening of an account "
Finally, it questions whether they monitor their users’ transactions and if so, how, as well as whether they allows their users to “carry out transactions in non-traceable methods, like cash.”
The news outlet adds that both banks and crypto exchanges can ask the antitrust watchdog to keep their answers a secret by adding to them a “restricted access” classification. Whether these will remain a secret, however, reportedly depends on the regulators’ analysis.
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