Source: Ambcrypto, originally published on .
In a landmark judgment, the Superior Court of Justice, the second top court of Brazil, said that banks have the authority to close cryptocurrency-related accounts without any justification.
The court vindicated its ruling by stating that the move is in compliance with the Brazilian banking regulations.
The ruling was given at the end of a lawsuit filed by Mercado Bitcoin, one of Brazil’s largest Bitcoin [BTC], against Itau Bank for closing their accounts abruptly. The verdict is viewed by lawyers as a benchmark for future lawsuits involving banks and exchanges.
Itau had supported their side by stating that anti-money laundering regulations and customer identification involved in the opening of new accounts gave them the necessary rights to close any bank account. They also quoted the National Monetary Council standards to strengthen their point.
If an account is found to be involved in or facilitating any illegal activity, it was up to the bank’s discretion to discontinue the account or not, even if the claims are not proved.
Mercado Bitcoin, in an attempt to win the case, claimed that such decisions were detrimental to free market and accused them of abusing the market powers in the country.
However, the court concurred that Itau was in the clear, unless the complainant could prove that the former is breaking any constitutional norm. The court also added that even if they did prove such a claim, they will then have to appeal to the Supreme Court directly.
In Brazil, Bitcoin and other cryptocurrencies are relatively free of regulations. The Central Bank and the Financial Activities Control Council (COAF) do not monitor the trade of tokens.
Though banks have a problem with this, according to experts, it is unlikely that they are in competition with cryptocurrencies. Pedro Henrique Pessanha Rocha, president of Brazilian Board of Lawyers on the Federal District (OAB-DF), said:
“Honestly, I do not believe banks are afraid of the competition of the exchanges, even because they operate in different areas … they are afraid of frail compliance control in the prevention of money laundering.”
As cryptocurrencies also fall under the ambit of the Money Laundering Law, the only way for cryptocurrency exchanges to live in the environment is by finding creative ways to gel with the law. Tiago Severo, executive secretary of the OAB-DF banking committee, commented on the matter recently. He said:
“The bank’s entire responsibility … we are in a context where several institutions are re-evaluating, reinforcing the criteria for preventing money laundering.”
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