Brazil’s antitrust watchdog, the Administrative Council for Economic Defense (CADE), has recently launched an investigation into whether the country’s banks are purposefully harming cryptocurrency exchanges by restricting their operations.
According to Reuters, the investigation is set to find out whether the banks abused their position in the market to harm the crypto exchanges’ businesses in alleged monopolistic practices. Banks set to be investigated include Banco do Brasil, Banco Bradesco, Itau Unibanco, Banco Santander Brasil, and more.
The investigation was reportedly requested back in June by the Brazilian Association for Cryptocurrency and Blockchain (ABCB), after the bank accounts of Atlas Quantum were closed. As CCN covered, Atlas was hacked last month and saw the data of 264,000 users get leaked. The company itself is seen by some as a Ponzi scheme.
Per CADE, the country’s banks are “imposing restricting or even prohibiting… access to the financial system by cryptocurrency brokerages.” The investigation, Reuters reports, may lead to a new clash between the banks and crypto exchanges, after one in which a Brazilian cryptocurrency exchange, Walltime, won.
In reaching out to regulators, Brazil’s crypto exchanges are trying to stop the banks from shuttering their accounts without a proper explanation so they can keep on operating. They hope the antitrust regulator will force them to either keep their accounts or open new ones. CADE reportedly claimed there was no reason to decide immediately.
Fighting against the accusations, the banks claimed some crypto exchanges didn’t have the client data required by law to prevent money laundering. As such, they shuttered their accounts to avoid a potential backlash from the central bank.
Commenting on the case, CADE officials claimed that while illicit activities do need to be avoided, the banks’ conduct doesn’t seem reasonable.
"However, it does not seem reasonable for banks to apply such restrictive measures a priori on a straight-line basis to all cryptocurrency companies, without examining the level of compliance and the anti-fraud measures adopted by individual brokerage firms conferring unlawful treatment per se on businesses brokering cryptocurrencies."
The regulator is now set to discuss the case with the country’s central bank before making a decision. In Brazil, regulators are on the defensive as crypto exchanges now have more accounts than stock exchanges, as the nascent industry is booming.
As CCN covered, the government has sent local cryptocurrency exchanges a questionnaire in an attempt to know more about their businesses and study their potential use in money laundering.
Huobi, one of the largest cryptocurrency exchange by trading volume, has entered the country. XP Investimentos, Brazil’s biggest investment firm, was reportedly working on launching a crypto exchange earlier this year, although it’s unclear if it still is.
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