Superior Court of Justice of Brazil Deems That Banks Can Close Accounts of Crypto Exchanges Without Justification

ICOBox head of International PR Dima Zaitsev on the decision of the Superior Court of Justice of Brazil on the closing of accounts of crypto exchanges

Superior Court of Justice of Brazil Deems That Banks Can Close Accounts of Crypto Exchanges Without Justification

Another chapter in the long battle between banks and crypto exchanges took place last Tuesday in Brazil. The Superior Court of Justice (STJ) decided that financial institutions present in the country do not violate the law by closing accounts of digital currency brokers without justification. According to the Court, these institutions are following the rules defined by Brazilian banking regulations.

The matter is still under investigation in the Administrative Council for Economic Defense (CADE), as crypto exchanges claim that banks violate competition laws in the market by canceling brokers’ accounts.

The most emblematic case in this battle involves the bank Itaú Unibanco and the crypto exchange Mercado Bitcoin. Banco Itaú (which last year purchased part of XP Investimentos and has already announced its own crypto exchange — XDEX) argues that it needs to follow the laws and regulations on money laundering. According to the bank, the processes carried out by crypto exchanges do not allow this to be done efficiently.

As far as the bitcoin market is concerned, when closing an account without justification the banks are effectively undermining free competition in the market. According to the National Monetary Council, however, after sending a notification to the client banks can close accounts without having to provide a justification.

The trade in crypto assets is not yet regulated in Brazil. The lawsuits involving banks and brokerages are pressing the Brazilian government for specific rules for this market. While banks apparently do not fear competition with the exchanges (many of them have even picked up small cryptocurrency backers for more conservative investments), they still seem to be concerned about money laundering. In this scenario, Brazil is rightfully clamoring for market regulation.