Xdex — a Brazilian Bitcoin exchange service has shut down its operations claiming tough regulatory measures in the country.
The crypto exchange becomes the latest in Brazil to shutter as platforms continue to be crushed under the growing cost of compliance and lack of support from commercial banks.
The situation in Brazil is reportedly symptomatic of the harsh realities faced by crypto exchanges in Latin America as banks and financial regulators appear to be establishing more anti-cryptocurrency measures.
Several virtual currency trading ventures have been forced to move their operations to more crypto-friendly jurisdictions overseas.
Xdex Bitcoin Exchange Shuts up Shop
Xdex announced the news of its shutdown via an official announcement published on its website on Tuesday (March 31, 2020). The news of Xdex closing up shop comes barely a year and five months after the exchange platform began its operations in the country
According to the Xdex announcement, the venture which originally began as an exciting business prospect has been overshadowed by Brazil’s crippling anti-crypto climate hence the reason for its decision to close the exchange.
The blog post further directs customers of the Bitcoin exchange to withdraw their assets within 30 days from the official announcement. Xdex also states that users who need to make inquiries can do so via the company’s website or telephone within the withdrawal period.
However, if customers fail to withdraw their crypto assets within the 30-day period, the virtual currency trading platform will sell off their holdings on behalf of the users. The fiat currency from the sale will be paid into customers’ registered bank accounts within three working days.
Brazilian Crypto Exchange Woes Continue
Xdex joins the list of Bitcoin exchanges to shutter its services due to unfavorable conditions in the country. As reported by Blockonomi in February 2020, two local crypto exchanges, Acesso Bitcoin and Latoex closed down their businesses as a result of Brazil’s strict tax laws.
Brazil does not have a robust regulation regarding cryptocurrency nor does the country have clear-cut virtual currency tax policies. Apart from the lack of regulatory and tax policies for digital currency, the relationship between Brazilian banks and Bitcoin exchange platforms have not been cordial.
Back in September 2018, the country’s antitrust regulatory body, the Administrative Council for Economic Defense (CADE), investigated major banks that reportedly closed accounts involved in crypto trading. Although, the banks stated that the accounts were shut down as they didn’t follow Brazil’s anti-money laundering (AML) rules.
Later in December 2019, the CADE ruled that banks could withdraw financial services from virtual currency exchanges. The ruling did not go down well with stakeholders, especially the country’s Association of Cryptocurrencies and Blockchain (ABDC).
In January 2020, Banco Bradesco, Brazil’s major commercial bank, announced intentions to stop offering banking support for virtual currency exchanges, citing the usual rhetoric that crypto assets are risky and can be used for illicit activities.
Latin American Banks Stifling Crypto Commerce
Outside of Brazil, Banks in Latin America are not friendly towards the nascent industry. In November 2019, Argentina’s central bank restricted the use of credit cards to purchase bitcoin and other altcoins.
In Chile, one of the commercial banks, Banco de Crédito e Inversiones closed the account belonging to Chilebit, Chile’s premier crypto exchange. These actions have forced Bitcoin exchanges across Latin America to take legal actions, challenging the hostile activities of these commercial banks.
For regulators in these countries, the justification for their anti-crypto stance evokes many of the well-worn rhetoric espoused by Bitcoin bashers the world over. Meanwhile, virtual currencies continue to be a haven for people caught under political and economic turmoil in countries like Venezuela.
Bitcoin proponents in Latin America will be hoping for a similar reversal of stringent crypto banking bans as was the case in India. Earlier in the year, India’s Supreme Court overturned a previous ban by the country’s central bank prohibiting commercial banks from providing services to BItcoin exchanges.