A landmark case that defined the Brazilian crypto market this week. This Tuesday, October 9, it was decided by the Superior Court of Justice, the second-highest law court of the country, that banks can simply shut down crypto-related accounts without any kind of justification.
During a judgment of Itaú Unibanco versus the crypto exchange Mercado Bitcoin, the court ruled by a majority vote that a bank can shut down crypto accounts without violating the law as it is not an abuse under the Brazilian consumer protection code to do so.
A New Legal Precedent
Portal do Bitcoin, affirmed that this was a landmark case and that it can change the future of the Brazilian crypto exchanges. According to Natalia Garcia, the juridic director of Foxbit, which was quoted by the local news outlet, having banking access is essential to the market and this decision can basically “finish the cryptocurrency sector” in Brazil.
Another problematic aspect stated by Portal do Bitcoin was that the country did not have any prior court cases to base its future decisions, so this decision, which was based in a resolution that the Central Bank of Brazil made in 1993, will have a lot of impact in the market.
The case was being judged since 2015. At the time, the company was notified that its account would be terminated by the bank in 30 days under “commercial uninterest” reasons. After Banco do Brasil (a state bank and one of the major banking entities in the country) decided to shut down Atlas Quantum’s account.
Atlas was another cryptocurrency exchange located in Brazil which was recently in the middle of a leak. According to reports, 261,000 investors from Atlas had their information leaked to the dark web, where it was sold. The decision prompted Banco do Brasil to terminate the accounts of the company.
Looking for Offshore Banking
As the banks in Brazil do not have a very friendly relationship with crypto exchanges in the country, it may come a time in which the exchanges of the country will have to look for offshore banks in order to operate within Brazil. As the country is not known for having a lot of Bitcoin users, most people buy the tokens with fiat directly from the Brazilian exchanges, so they need banking access to exist.
Most crypto companies still use Brazilian banks for banking services, but this can change quickly if the decision inspires other banks to dump these companies. This will lead into either of two scenarios: either the market will slowly die or it will have to use offshore banks.