Brazil watchdog cracks down on banks restricting crypto exchanges

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The Administrative Council for Economic Defense, an official antitrust watchdog of the Brazilian government, has launched an investigation into the country’s banks, which were allegedly abusing their power to undermine domestic cryptocurrency exchanges.

On Wednesday, Reuters reported the investigation, which was opened on Sept. 18, will determine whether banks decision to restrict cryptocurrency brokers is harmful to the domestic crypto market. The Brazilian Association of Cryptocurrency and Blockchain (ABCB) requested the investigation back in June after Atlas Quantum, a bank in Brazil, closed accounts belonging to crypto companies.

The investigation will look into several banks in the country, including Banco do Brasil, Banco Bradesco, Itau Unibanco, and Banco Santander Brasil, according to the report.

Cryptocurrency exchanges filed to have the matter investigated to stop banks from closing their accounts without proper explanation. Exchanges hope that the investigation will help solve this issue and have their accounts opened or be given a way forward.

Reuters expect the investigation to cause another clash between the banks and crypto exchanges in the country. The banks are denying the allegations and claim that accounts belonging to the cryptocurrency brokers were closed because of missing client data, which they say are crucial in keeping the accounts open. The banks claimed they had to close the accounts to avoid backlash from the central bank.

CADE officials noted that the conduct by the bank was not unreasonable, saying that by applying such restrictions, the financial institutions were merely trying to follow the already set anti-fraud measures. However, CADA is still investigating the matter and has yet to make a decision about the case.

Brazil has seen tremendous growth in the number of cryptocurrency exchanges across the country. Currently, cryptocurrency exchanges have more accounts than stock exchanges, which is causing authorities to move in and enact measures to protect its economy. Recently the Brazilian government sent questionnaires to local cryptocurrency exchanges in an attempt to get a better understanding of their businesses. In July, police in Brazil arrested 12 individuals accused of laundering millions through cryptocurrencies. The gang was suspected of laundering millions of dollars acquired from drug trafficking using cryptocurrencies.