Brazil Regulator Votes to Continue Probe Into Banks’ Rejection of Crypto Firms
22 May 2020

Brazil’s biggest private banks are not out of the woods yet.

On Wednesday, Brazil’s antitrust watchdog, the Administrative Council for Economic Defense (CADE), voted to continue its investigation of banks who denied financial services to crypto brokers in alleged violation of Brazilian competition law.

CADE’s nearly two-year-old inquiry into Itaú Unibanco, Banco do Brasil, Santander, Inter, Bradesco and Sicredi now returns to the General Superintendency for further review, as per the decision by CADE’s chief tribunal. Those six banks comprise the lion’s share of Brazil’s banking sector.

The ruling, made by a seven-member tribunal, reopens the possibility that these powerhouse banks – they held over 80% of deposit market share during the time in question – could face eventual sanctions and even be forced to provide financial services to crypto brokers.

Such an outcome appeared unlikely as recently as last week, after the General Superintendency, CADE’s investigative wing, tried to close the case on technical grounds. But on May 13, Counselor Lenisa Rodrigues Prado called upon CADE to reopen its investigation.

In Prado’s view, these banks failed to give reasonable justification for shutting out crypto brokers. She found “significant evidence” that they had violated Brazilian laws protecting market competition and called upon CADE to initiate a sanctions inquiry.

Fernando de Magalhães Furlan, a former CADE official who leads the Brazilian Cryptocurrency and Blockchain Association’s (ABCB) charge against the banks, said the ruling “is a victory to the Brazilian crypto sector. ABCB represents 39 crypto brokers, according to Furlan.


Crypto brokers and banks had been at loggerheads before CADE launched its probe in September 2018. Banks, weary of the legal grey zone that cryptocurrency trading inhabits in Brazil (and allegedly fearful cryptocurrency’s success would eat into their own) had begun shutting down crypto brokerage accounts.

Without brokerage accounts, exchanges such as Nox Bitcoin could not easily provide cash on and off ramps to their customers. Founder João Paulo Oliveira said Banco Bradesco closed his brokerage account.

Banco Bradesco declined to comment on CADE proceedings.

It was a pattern rippling across Brazil’s crypto landscape, said Furlan, who as CEO of ABCB first called for a CADE investigation in April 2018.

Furlan said the banks would swoop in and close accounts “without any justification whatsoever.” He said their collective cold shoulder was a broadside to Brazil’s growing crypto industry.

“No company, no enterprise can survive in capitalism without access to the financial system,” Furlan said.


Itaú Unibanco denied allegations it acted anti-competitively.

Itaú “has always guided its commercial practices based on the defense of free initiative and competition, as well as the understanding that competition is positive not only for the financial system, but for the whole country,” a spokesperson told CoinDesk.

There does not appear to be any evidence the banks coordinated their decisions, Furlan said. A previous CADE official said none of them wielded individual market power, according to Furlan. These are usually two hallmarks of anti-competitive case law.

Indeed, Furlan said, a different CADE official’s December 2019 attempt to drop the case partly rested on the banks’ individual inability to control the market.

Furlan said it was a distinction without a difference. Four of the banks involved in the inquiry rank among the five-largest in all of Brazil. CADE said that in 2017, a year before its own investigation began, the six banks together held over 80% of Brazilian deposits.

The other argument Furlan said the first CADE ruling drew from was the banks’ stated fear that crypto brokers would expose them to money laundering.

By Danny Nelson, CoinDesk, 20 May 2020

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