The biggest banks in Brazil are still under investigation for refusing to provide services to cryptocurrency companies in the country.
CADE Continues Probe into Brazilian Banks
The Administrative Council for Economic Defense (CADE), Brazil’s antitrust regulatory agency, voted on Wednesday to continue its investigation into the banks in the country, which have denied financial services to cryptocurrency companies. According to the watchdog, the act is a violation of the Brazilian competition law.
The CADE probe, which has been going on for nearly two years now, is focusing on some of the major banks in Brazil, including; Itaú Unibanco, Banco do Brasil, Santander, Inter, Bradesco and Sicredi. These banks are now set to appear before the General Superintendence for further review, according to the decision reached by the CADE’s chief tribunal.
The seven-member tribunal reopened further investigations into these banks and this could lead to eventual sanctions and forcing them to offer financial services to cryptocurrency companies. These six banks currently hold over 80% of the deposit market share and continue to comprise the lion’s share of Brazil’s banking sector.
The possible outcome now would not have been possible just a few days ago after the General Superintendence, CADE’s investigative arm, tried to close the case based on some technical grounds. However, on May 13, Counselor Lenisa Rodrigues Prado urged CADE to reopen the case and pursue it further.
According to Prado, the banks have not given justifiable reasons for denying cryptocurrency companies financial services. According to the Counsellor, she found significant evidence that these commercial entities violated Brazilian laws protecting market competition. As a result of this, she has asked CADE to reopen its investigation into the six leading banks in the country.
A Push For Cryptocurrencies in Brazil
The ruling is a victory to the cryptocurrency sector in Brazil, according to Fernando de Magalhães Furlan, a former CADE official who currently heads the Brazilian Cryptocurrency and Blockchain Association’s (ABCB) case against the top banks.
Cryptocurrency brokers and banks in Brazil have been at odds since 2018 after the banks started denying these brokers services. The banks realized the grey area for cryptocurrency regulation in Brazil and used that to deny the crypto brokers financial services and to shut down existing crypto brokerage accounts.
Furlan pointed out that banks started closing down crypto brokerage accounts without any sort of justification, making it almost impossible for cryptocurrency brokers to operate in the country. He added that their collective cold shoulder affected the growth of the cryptocurrency industry in Brazil. According to Furlan, no company or enterprise can survive in capitalism with zero access to financial services.
Itaú Unibanco came out to deny that it acted anti-competitively. The bank stated that its commercial practices are guided by the defense of free initiative and competition. Their spokesperson noted that competition is positive in the financial system and is necessary for development in the country.
Despite the current investigation, Furlan revealed that the banks did not coordinate the attacks on crypto brokers. CADE officials had previously highlighted that one of the banks wielded individual market power, which is a sign of anti-competitive case law. As such, CADE wanted to drop the case in 2019 based on the inability of any of these banks to control the market.
However, Furlan highlighted that the banks acted because of the fear that cryptocurrency brokers would expose them to money laundering, an allegation that the crypto industry vehemently rejected. The cryptocurrency community in Brazil came out to assure the banks and the general public that they do an excellent job of checking the legitimacy of the money they come in contact with, better than banks or other financial institutions.
Itaú, the second largest bank in Brazil, concluded that it remains confident that its activities will be considered legal and valid.