Per judge Regina Lucia Passos ruling local financial institutions must provide a justified reason before closing down an account belonging to a crypto firm. Furthermore according to judge Passo Banco Sicoob Banco Sicoob violated regulations put in place by Banco Central Do Brasil specifically under resolution No. 2,025/93 where financial institutions are required to provide enough information to the account holder when they intend to close an account. In its defense, Banco Sicoob claimed commercial disinterest was the main reason that led to the closure of Mercedo Bitcoin exchange account. Besides violating resolution No. 2,025/93, Banco Sicoob actions led to them going against Bacen circular No 3,788/16. The circular clearly states that the recipient should be provided with clear intention when the institution is on the verge of terminating their account. With that Judge Passos squashed Banco Sicoob appeal further cementing Barra da Tijuca decision which had also rule in favor of the exchange.
Current Court Decision Overturns Brazilian High Court Ruling In 2018
In 2018 October a court decision made by the Brazilian High Court gave financial institutions in Brazil the rights to close any account belonging to players in the crypto sector without providing any reason. But now Judge Passos decision has contradicted the Brazilian High Court October 2018 decision. In her ruling, she cites two regulations. On the other hand in 2018 the High Court said players in the industry such as exchanges are free to proceed to the Supreme Court and prove how the banks have broken the rules in its action of closing its account.
Apart from Banco having to content with the court’s decision two other banks in Brazil had to reopen accounts of their client’s or face fines. The two banks were Banco Santander, and Banco do Brasil. The two were to be penalized if they didn’t comply with the Federal District Court order. The court termed the actions of closing the accounts as abusive and a violation of rights, consumer rights. Besides the two banks closing accounts of exchanges, six other banks had taken the same action. In a country where the Central Bank has not placed a complete ban on digital coins, it’s quite a shame that the local financial institutions are making the development of Brazil’s crypto industry difficult. The Central Bank of Brazil only issued an advisory to Brazilians concerning the risks that come with holding or making investments in virtual currency.