On May 20th, Brazil’s antitrust regulator, the Administrative Council for Economic Defense (CADE), reopened an inquiry to investigate the conduct of some Brazilian banks which reportedly denied financial services to cryptocurrency trading companies.
The lawsuit was originally filed in 2018 by the Brazilian Cryptocurrency and Blockchain Association (ABCB), which alleged banks were violating Brazil’s competition laws when they began cancelling accounts of customers trading crypto assets. The six banks involved in the investigation - Banco do Brasil, Bradesco, Banco Inter, Itaú Unibanco, Santander and Sicredi - detain the lion’s share of Brazil's banking market.
Based on the Brazilian Central Bank's guidelines, cryptocurrencies are considered digital representations of value with no direct links to the official monetary system. However, customers must have a bank account to declare potential financial earnings.
In this context, ABCB argued that traditional banks were unfairly impairing customers and preventing their acess to the traditional financial system, in addition to questioning the legality of this practice. The reopening of the case by the Brazilian Competition Authority means the aforementioned banks could face sanctions and even be forced to provide financial services to cryptocurrency brokers, which would represent a landmark in Brazil’s legal and financial markets.
In contrast, banks urged caution in allowing the free circulation of cryptocurrency assets due to the regulatory vacuum regarding this sector. Nevertheless, CADE councillor Lenisa Rodrigues Prado ruled that the six investigated banks failed to provide any reasonable justification for shutting down the accounts of crypto brokers.
The emerging trend is thus of conflict related to the traditional financial system's inability to accomodate new economic agents. CADE is likely to solve the case whilst setting key precedents which are likely to shape the evolution of the financial sector over the years to come.