Brazil’s Antitrust Agency Probes Banks For Closing Crypto Accounts

News | September 19, 2018 By:

The Administrative Council for Economic Defense (CADE), Brazil’s antitrust regulator, is investigating six major national banks for allegedly using their market position to undermine the performance of crypto brokers.

In June of this year, the Brazilian Association for Cryptocurrency and Blockchain (ABCB) filed an administrative motion against the country’s largest banks, claiming that the banks were abusing their power as financial players by closing accounts of brokerages trading in bitcoin.

“FinTechs and crypto-related startups need fair access to the financial system in order to survive and cannot be arbitrarily blocked by larger financial institutions,” ABCB director Fernando Furlan said at the time. “It’s unacceptable from the [market] competitive point of view.”

On Tuesday, CADE announced that it has launched a probe to look into alleged monopolistic practices by Banco do Brasil, Banco Bradesco, Itau Unibanco Holding, Banco Santander Brasil, Banco Inter and cooperative bank Sicredi. CADE said that it received numerous complaints that “the main banks are imposing restrictions or even prohibiting … access to the financial system by cryptocurrency brokerages.”

In response, the banks argued that the accounts were closed because of the absence or lack of client data that is required by law to prevent money laundering.

“Illicit activities should be avoided and banks should take restrictive measures when there are indications of crimes committed by their account holders,” CADE said. “However, it does not seem reasonable for banks to apply restrictive measures a priori on a straight-line basis to all cryptocurrency companies, without examining the level of compliance and anti-fraud measures adopted by individual brokerage firms.”

CADE said that it will request new documents and exchange views with the central bank before deciding whether the case will become an administrative proceeding.

In a statement, Banco do Brasil said that it provided the information requested by the antitrust regulator and that it is committed to “competitive practices based on ethics and respect for free competition.” While Itaú Unibanco said it will collaborate with CADE and that it is “confident that its conduct will be considered legitimate.”