In a landmark judgment, the Supreme Court of Brazil second (Superior Court of Justice) said that the bank has the right to close and without any justification cryptocurrency -related accounts.
The court proved that the move was in line with the Brazilian banking regulations and proved that its ruling was correct.
The ruling was made when Mercado Bitcoin, one of Brazil’s largest bitcoin exchanges, filed a lawsuit against Itau Bank’s sudden closure of the account, which was considered a benchmark for future litigation involving banks and exchanges.
Itau supports their position, pointing out anti-money laundering regulations and the identity of clients involved in opening new accounts, giving them the right to close any bank account. They also cited the standards of the National Monetary Council to strengthen their views.
If an account is found to be involved in or assist in any illegal activity, it is up to the bank to decide whether to terminate the account, even if the claim has not been confirmed.
The exchange Mercado Bitcoin tried to win the case, claiming that these decisions were not conducive to the free market and accused them of abusing the country’s market power.
However, the court agreed that Itau was innocent unless the complainant could prove that the former violated any constitutional norms. The court also added that even if they did prove this, they must appeal directly to the Supreme Court.
In Brazil, bitcoin and other cryptocurrencies are relatively unregulated. The Central Bank and Financial Activity Control Committee (COAF) does not monitor token transactions.
Experts say that although banks have problems in this area, they are unlikely to compete with cryptocurrencies. Pedro Henrique Pessanha Rocha, Chairman of the Brazilian Federal District Attorney Affairs (OAB-DF), said:
“To be honest, I don’t think banks are afraid of competition on the exchanges, even if they do business in different areas… they are afraid to implement weak compliance controls in preventing money laundering.”
Since cryptocurrency is also in the category of money laundering, the only way to survive in this environment of cryptocurrency trading is to find creative ways to combine it with the law. Tiago Severo, Executive Secretary of the OAB-DF Banking Committee, recently commented on the matter. He says:
“The full responsibility of the bank… The environment we are in is that several agencies are reassessing and strengthening the standards for preventing money laundering.”
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