Brazil Largest Broker Joins Crypto Trend
Brazil’s biggest independent brokerage is the latest company to join the cryptocurrency bandwagon.
Grupo XP, which owns brokerage firm XP Investimentos SA, unveiled its plans to set up an exchange for Bitcoin and Ethereum trading in the coming months, said Guilherme Benchimol, its chief executive officer.
Benchimol said Grupo XP decided to venture into crypto trading because approximately 3 million Brazilians are exposed to bitcoin, while some 600,000 others have holdings in stocks. However, he noted the company’s reluctancy to enter the crypto arena.
“I must confess, this is a theme I’d rather didn’t exist, but it does. We felt obligated to start advancing in this market,” Benchimol told attendees of an event in Sao Paulo.
The new crypto exchange, to be called XDEX, will be set apart from other brokerage entities of Grupo XP. To be operated by Thiago Maffra, it shall have about 40 employees.
Grupo XP made the announcement after Brazilian regulators issued a set of rules which aims to provide relief to crypto businesses in the country, with certain limitations.
Earlier, the Administrative Council for Economic Defense (CADE) said it was investigating the supposed malpractice in digital currency trading by Banco do Brasil SA, Banco Bradesco SA, Itau Unibanco Holding SA, Banco Santander Brasil SA, unlisted Banco Inter, and cooperative bank Sicredi.
These monopolistic practices “could be limiting the action of brokers” within the cryptocurrency industry… In fact, the main banks are imposing restrictions or even prohibiting … access to the financial system by cryptocurrency brokerages,” Brazil’s antitrust watchdog had said in a statement.
A source privy to the matter divulged that “many banks are closing (crypto) exchange accounts with no explanation.”
In response to the independent agency’s statement, the banks in question argued that the accounts were closed due to absence or insufficient client data as required by existing laws in order to prevent money laundering.
CADE launched the inquiry upon the request of Brazilian Association for Cryptocurrency and Blockchain (ABCB) in June. ABCB said these financial institutions were abusing their authority as financial players by closing accounts of brokerages with bitcoin-related transactions.
Brazil is a groundswell of cryptocurrency activity in Latin America. The number of people trading bitcoin or any other cryptocurrency has soared from a few dozen thousands two years ago, to about 1.4 million today. More than $2.4 billion worth of bitcoin was traded in the country last year, up from just $160 million in 2016.
In January, the Securities and Exchange Commission of Brazil (CVM) halted local investment funds from purchasing digital currencies since these are not considered as financial assets. But the CVM stated that indirect ownership is allowed, meaning Brazilians could buy crypto investment funds. But they are told to await further clarification.