Brazil’s central bank issued its most extensive crypto regulations to date, creating a formal licensing regime for service providers and classifying a wide range of crypto activities as subject to foreign exchange and capital market rules.
The framework introduces three resolutions that define how crypto companies must operate in South America’s largest economy, how much capital they must have, and how international crypto transactions will be treated under the law. The rules will come into force on February 2 and existing businesses will have nine months from then to comply.
The regime marks the Banco Central do Brasil’s most comprehensive attempt yet to govern its fast-growing, but largely unregulated, crypto sector. While the central bank has put forward several proposals since 2019, progress has stalled due to institutional friction and industry resistance.
The challenge “was to find a way to unite innovation and security,” Gilneu Vivan, the bank’s regulatory director, said in a press conference, according to local media outlet Portal do Bitcoin. “The cryptocurrency market is highly dependent on technology and has very important obligations related to anti-money laundering. All of this requires guarantees that it will be well executed.”
Some of the banks’ regulations, including capital requirements and deadlines, came under attack by the crypto industry.
Capital levels surprise
Companies in the industry will need to have a minimum of 10.8 million reais ($2 million) in capital, the bank said. Depending on the type of business, some companies will need to have at least 37.2 million reais. This figure is well above the between 1 and 3 million reais proposed during the public consultation phase.
Bernardo Srur, president of the Brazilian Cryptoeconomics Association (ABCripto), called the framework “positive and necessary,” but criticized both the capital ban and the short time frame for achieving compliance, which he said could deter competition.
Companies that do not meet the compliance deadline, which includes demonstrating capital levels, cybersecurity controls, customer due diligence practices and risk assessments, will not be able to operate. Foreign companies active in the country must establish a local entity and transfer operations under that structure.
The rules establish a new type of business entity: Sociedades Prestadoras de Serviços de Ativos Virtuais (SPSAV), or Virtual Asset Service Providers (VASP), which must now obtain a license from the central bank and are divided into three categories based on the services they offer: intermediaries, custodians and brokerages.
Exchange controls affect self-custody portfolios
The framework also includes various types of crypto transactions, including those involving stablecoins, within Brazil’s foreign exchange and cross-border capital controls regime. These include international cryptocurrency payments, transfers to and from self-custody wallets, and cryptocurrency-to-fiat transactions.
Companies authorized to operate in Brazil’s foreign exchange markets, including VASPs, can carry out these transactions, but with restrictions that include a limit of $100,000 per transaction. Starting May 4, they will have to report these transactions monthly to the central bank with details including client details, asset types, amounts in reais and links between counterparties.
VASPs are also prohibited from handling physical currency (domestic or foreign) and using foreign cash in cryptocurrency purchases.
The goal, officials say, is to reduce regulatory arbitrage and bring transparency to the role of cryptocurrencies in Brazil’s balance of payments and economic statistics.
