In a pioneering decision, Brazil's Superior Court of Justice has ruled financial institutions do not violate laws by shuttering bank accounts of cryptocurrency traders which do not comply with regulations, Reuters reported.

Mercado Bitcoin Serviços Digitais Ltda. filed a lawsuit against Itaú Unibanco Holding SA after the bank closed the company's account for "commercial reasons." After losing the case in lower courts, Mercado Bitcoin took the matter to the Superior Court.

Itaú argued it was following regulations on anti-money laundering procedures when it closed the account as the cryptocurrency trader could not offer a way to certify the legality or origin of its funds. Additionally, the banking giant pointed out Brazil's monetary council CMN's regulations that allow financial institutions to shutter accounts without specific justification.

According to the report, four out Superior Court's five judges ruled that Itaú had not violated any rules.

However, justice Nancy Andrighi, who previously ruled in favor of Mercado Bitcoin, reportedly argued that Itaú was violating the cryptocurrency brokerage's rights by denying it access to an essential service such as a current account.

Meanwhile, antitrust regulator Cade is conduction a separate investigation into the matter to determine if banks have committed anti-competitive acts by closing accounts of cryptocurrency traders.

The dispute comes amid a wider debate in Brazil on the closure of bank accounts belonging to companies that operate with virtual currencies, a sector that is still not regulated by Banco Central do Brasil or the Council for Financial Activities Control.

Local cryptocurrency and blockchain association ABCB recently asked Cade to ban banks from closing such accounts, after Banco do Brasil SA closed a bank account of another startup company, Atlas, which operates with bitcoin.