Last month a watchdog agency began looking into six banks after the Brazilian Association for Cryptocurrency and Blockchain filed a complaint. Now they're requiring ten cryptocurrency exchanges and an OTC trading desk to answer some questions.
UPDATED | October 3, 2018:
As a follow-up to its September investigation, on Monday, October 1, the Administrative Council for Economic Defense (CADE) sent an official questionnaire to 10 cryptocurrency exchanges and one OTC trading desk, according to an article in the Brazilian-language news outlet, Portal do Bitcoin. The questionnaire is intended as a means to investigate possible anti-competitive conduct.
The survey opens by asking exchanges to describe their operations in Brazil, and to provide some basic contact information. It then goes on to ask the exchanges if they have ever had a bank account closed or been denied banking services, and to what extent any such denial has led to financial loss.
CADE also requires exchanges to give a detailed explanation about the exchanges' anti-terrorist, anti-money laundering (AML) and know your customer (KYC) protocols, as well as information regarding how well they monitor and regulate customer transactions.
The exchanges that received this questionnaire are required to provide answers by October 19 or face penalties of 5,000 Brazilian real (roughly $1,277) per day, or up to 100,000 real total (approximately $25,552).
ORIGINAL | September 19, 2018:
Brazil's Administrative Council for Economic Defence (CADE) has opened an investigation into several of the country's largest banks over monopolistic practices that may restrict the operation of local cryptocurrency brokers.
According to Reuters reports, CADE opened the investigation on September 18 after a request in June from the Brazilian Association for Cryptocurrency and Blockchain (ABCB). Several of Brazil's largest banks are subject to the investigation: Banco do Brasil SA, Banco Bradesco SA, Itau Unibanco Holding SA, Banco Santander Brasil SA, Banco Inter, and Sicredi.
ABCB has reportedly accused the banks of using monopolistic practices to disadvantage cryptocurrency brokers by closing the bank accounts of – or refusing to open accounts for – these cryptocurrency actors.
The request from ABCB appears to include a case where Banco do Brasil closed the bank account of cryptocurrency arbitrage trader Atlas. ABCB president Fernando Furlan reportedly called the closure "abuse" because FinTech platforms like Atlas and cryptocurrency exchanges need access to traditional banking services to effectively operate.
Furlan, a former CADE chairman, reportedly informed his former organization that the restrictive practice is common across Brazil's leading banks. Furlan plans to meet with Brazil's Central Bank and the Brazilian Securities and Exchange Commission to hear their concerns over cryptocurrencies.
Brazil's banks have argued that the account closures are due to a lack of client data and therefore are done to comply with anti-money laundering laws. But in calling for the investigation, CADE points to the banks "imposing restrictions or even prohibiting ... access to the financial system by cryptocurrency brokerages."
CADE is an independent watchdog agency under the Brazilian executive branch. It is charged with enabling free competition. According to its website, "CADE is responsible for judging and punishing, administratively and ultimately, individuals and companies that have committed violations against the economic order."
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