Business 4 October 2018

Dan Taylor

Brazilian crypto exchanges face ultimatum—complete gov’t survey or pay fines

The Administrative Council for Economic Defense (CADE), Brazil’s antitrust regulator, has served cryptocurrency exchanges under its jurisdiction with an ultimatum—complete a questionnaire by October 19, or risk a fine of up to $25,000.

According to local press reports, the questionnaire was sent to cryptocurrency businesses last October 1, following an investigation launched by the Brazilian Association for Cryptocurrency and Blockchain into how financial institutions viewed the cryptocurrency sector.

Earlier in 2018, CADE launched a separate investigation into Brazilian banks over allegations they were intentionally harming cryptocurrency businesses, which the regulator said was a potential abuse of power.

According to the regulator at the time, mainstream banks were “imposing, restricting or even prohibiting… access to the financial system for cryptocurrency brokerages.”

The latest questionnaire is to be completed and returned promptly to the regulator, with even an ‘unjustified delay’ in response liable to a fine. In a note sent with the document to relevant businesses, the regulator made their expectations clear.

“In accordance with art. 40 of the Law 12,529 / 2011, the refusal, omission or unjustified delay of the requested information or documents constitutes an offense punishable by a daily fine of R$5,000.00 (five thousand reais) [about $1,270], and may be increased by up to twenty (20) times, if necessary to ensure its effectiveness, because of the economic situation of the offender,” the CADE stated.

The questionnaire asks cryptocurrency exchanges whether they have encountered problems with banking services, such as having bank accounts closed, as well as examining the attitude of exchanges towards illegal uses of cryptocurrency.

The regulator has allowed for some responses to be submitted in private, although it remains to be seen whether this guarantees any level of discretion or anonymity.

Based on the findings of the questionnaire, it is expected that CADE will return to consider whether further action is required to prevent the mainstream finance sector from unduly impeding the growth and development of crypto markets.

With the situation in Brazil reflected elsewhere in the world, all eyes will be on the Brazilian regulator’s response to these alleged abuses of power from the traditional banking world.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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