XDEX, a crypto exchange company owned by Brazil’s largest stock entity, shutters its doors amid a lack of progress in national cryptocurrency regulations.
The Brazilian cryptocurrency exchange announced through an official statement on their website that it was closing its doors after 17 months of operations on April 1, Wednesday.
Clients given 30-day grace period, automatic withdrawal of balance
XDEX gave out detailed instructions to its clients on how to withdraw their stakes from the now-closed cryptocurrency exchange. Clients have to do it within 30 calendar days.
Besides, the Brazilian company mentioned that they will provide direct customer support to its clients even after the 30-day withdrawal period has finished, stating that XDEX will automatically sell their holdings and deposit the money on their registered bank accounts.
Market challenges for XDEX
Despite having great opportunities during the early months of its operations, the company admitted that both “environmental and external factors” have led them to decide to cease the business.
They stated that the main reason for the shutdown of the exchange was uncertainty in cryptocurrency regulations in the country. They stated [translated]:
“The market projection, competition, and the few regulatory advances reduced the opportunities found at the beginning of the project and were the basis for this difficult decision taken by the company.”
Bleak outlooks for Brazilian crypto
Brazil used to be a rapidly emerging market for crypto. However, it remains that Brazilian authorities still do not consider virtual currencies as a legal form of tender. There has also been little to no change in terms of the overall regulatory outlook.
XDEX is not the first Brazilian crypto exchange to close.
Earlier in February this year, two Brazilian exchanges, Latoex and Acesso, also stopped operations following a continuing decrease in trading volumes, stricter cryptocurrency regulations, and huge fines imposed.
In 2018, Brazil’s Administrative Council for Economic Defense (CADE) opened a probe against several major Brazilian banks that allegedly closed accounts involved in cryptocurrency trading. The banks countered that the accounts were closed due to a lack of basic customer data required by anti-money laundering laws.
According to CADE [translated]:
“It does not seem reasonable for banks to apply restrictive measures in a linear manner to all cryptocurrency companies, without analyzing the level of compliance and the anti-fraud measures adopted by each broker individually, rendering the brokerage activity per se illegal.”
However, CADE seemed to have retracted from their earlier stance, following another probe of a Brazilian bank, Banco Bradesco, which also closed crypto-related bank accounts. They stated that it was essentially “legal” for banks to withdraw from crypto exchanges, adding:
“There is no evidence of antitrust crimes as a result of the rejection of some banks to establish contracts with certain cryptocurrency exchange [platforms].”
In response to CADE, the Brazilian Association of Cryptocurrencies and Blockchain (ABCB) claims that cryptocurrency rulings are full of “darkness, contradictions, and omissions.”