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Brazil to investigate banks that deny service to crypto-currency companies

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Brazilian banks that have denied service to crypto-currency companies are now being investigated by local authorities, according to a recent report by Folha de São Paulo.

On May 20, the Administrative Council of Economic Defense, or CADE, voted to reopen the case against local lenders that reportedly refuse to work with crypto-currency companies. The lawsuit was originally filed in 2018 by Associação Brasileira de Criptoativos e Blockchain, or ABCB, a São Paulo-based non-profit blockchain organization, after Banco do Brasil closed the account of the Atlas crypto-currency exchange citing an „administrative decision.

The bill mentions several other major Brazilian banks, namely Santander, Itaú Unibanco, Sicredi and Banco Inter, also accusing them of unlawful denial of service.

Brazilian crypto-currency exchanges are heavily affected by tax regulations

In December 2019, the case was closed after the defending banks claimed that there were no regulations issued by the central bank requiring them to provide services, while the cryptomoney market was unregulated and therefore prone to money laundering activities.

Now, CADE has unanimously decided to reopen the investigation, arguing that „no reasonable evidence was presented“ to justify the closing of accounts and the denial of services. Supervisory agency advisor Lenisa Rodrigues Prado is quoted as saying:

„To avoid the risk of pushing independent crypt-currency agents into the ‚limbo ambitious technical roadmap, 2020 election series, consortium blockchain network, bagged a new york trust charter, who is allowed to invest, cross-border payments platform, sent a statement, the summer of crypto love, initially rocky launch, subject to capital gains tax‚ of the financial system (which could increase the risks of money laundering), CADE must exercise its duty to protect competition in this growing market.

Post-Halving Report: Brazil Could Be a New Source of Demand for Bitcoin

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 participate in the new investigation.

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

Regulation of crypto-currency in Brazil

Brazil as the gateway to Latin America for the Blockchain industry
Cryptomontages in Brazil remain largely unregulated. However, in February 2020, Cointelegraph Brazil reported that two major crypto-currency exchanges were closed following threats of heavy fines due to renewed tax regulations.

Apparently, all crypto currency trading platforms in the country are within the scope of Regulatory Instruction No. 1888 issued by the RFB, which requires them to report all transactions or face fines ranging from BRD 500 to BRD 1500 (USD 120 to USD 360).