A Brazilian judge has just handed down a ruling that may make it easier for crypto companies and investors to make payments. Ruling on a case involving local Bitcoin (BTC) exchange Mercado Bitcoin and Banco Sicoob, Judge Regina Lucia Passos found no basis for the latter’s decision to close the former’s checking account. Despite a district court judge previously ruling that Mercado Bitcoin could keep its crypto account open, Banco Sicoob filed an appeal.
Reviewing the evidence, Passos stated that the bank needs a “justifiable reason” before closing a customer’s account. On this occasion, despite the volatile nature of crypto trading, the judge concluded that Banco Sicoob had illegally closed the exchange’s account. What’s more, she pointed out that the Central Bank of Brazil has not prohibited the buying and selling of cryptos.
Brazilian Judge Gives Bitcoin et al a Boost
In handing down the favourable verdict, Passos may have indirectly given the industry a boost. With national governments and banks still trying to build their legal foundations, a ruling like this could set a precedent. In other South American nations where Bitcoin et al aren’t illegal, Brazil’s current attitude could be helping investors. Scanning the list of South American countries where cryptos aren’t legal but also aren’t governed by any formal laws, there are plenty. Argentina, Chile, and Venezuela are just three countries that could see a spike in trading activity.
Indeed, with banks essentially being told they can’t simply close accounts used for crypto trading without good reason, investors should now have more confidence to invest. Even though online brokers provide a form of regulated trading via contracts for difference (CFDs), traditional crypto exchanges aren’t governed by financial regulations. Because of this, investors in some countries have issues when it comes to making deposits and withdrawals via traditional banking methods.
Banks Can’t Target Crypto Investors Unnecessarily
Banks no longer able to close cryptocurrency trading accounts could increase Bitcoin adoption in Brazil.
Image source: Oekka.k/Shutterstock.com
Although eWallets like PayPal provide a viable option, there are times when bank transfers and credit/debit cards are the only available methods. If banks are able to make their own rules at will and close accounts used for trading cryptos, it leaves consumers at the mercy of an external force. When that’s the case, it makes trading cryptos less attractive. However, with Brazil’s legal system upholding for the rights of customers, it will give investors more confidence. Of course, with crypto rules and regulations fractured, one country’s legal ruling won’t necessarily impact things elsewhere. However, legal precedents are always useful.
As it stands, buying Bitcoin et al is still an evolving process. Because of that, any type of favourable ruling should be taken as a positive. While the immediate impact may only be felt in Brazil, the reverberations could easily be felt around the world as 2019 develops. Even if it doesn’t transform the way banks interact with traders and the crypto industry at large, it’s a start. For an industry still finding its feet, a start is certainly better than nothing.
Featured image: Lukasz Stefanski/Shutterstock.com