Brazil Banks in Trouble Over Restrictive Measures Targeting Cryptocurrency Businesses

Authorities in Brazil have launched investigations over claims that banks in the country have embarked on illegal practices all in the effort of undermining cryptocurrency exchanges operations.  The country’s anti-trust agency Council for Economic Defense (CADE) is looking into whether banks have been using their position in the market to hurt crypto focused businesses.

Banco do Brasil, Banco Bradesco, Itau Unibanco, and Banco Santander Brasil are some of the banks under investigations. Media reports indicate that investigations could have begun as early as June after a request from the Brazilian Association of Cryptocurrency and Blockchain.

Some of the things that the watchdog is looking into are whether banks are restricting or prohibiting access to financial systems. The investigations now threaten to bring banks and cryptocurrency brokers into a collision course especially on competitive limits of performance.

Cryptocurrency exchanges, as well as brokers, are on record complaining over how banks continue to shut down the accounts without proper explanation. The exchanges want regulators to compel the financial institutions to cease from closing down accounts and open those already closed.

Banks, on the other hand, insist that background checks are a must as a way of complying with regulations especially those that seek to avert money laundering through cryptocurrencies. The banks also insist that most of the accounts were shut down because they lacked basic customer data required to prevent money laundering activities.

CADE, on the other hand, believes banks might have overstepped their mandate with the restrictive measures.

“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,” CADE in a statement.

CADE is yet to determine whether the banks have to open some of the accounts already shutdown. The agency is set to discuss with the country’s Central Bank on how to proceed with the matter even as it continues with the investigations.

Brazil is one of the few countries in the world which is crypto friendly to the extent where regulators are fighting for the rights of cryptocurrency exchanges. Increased protection has to do with the fact that there are more cryptocurrency exchange accounts than stock exchanges, even though the industry is in the early stages of development.