Brazil’s central bank issued its most sweeping crypto regulations to date, creating a formal licensing scheme 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 hold and how international crypto transactions will be treated under the law. The rules come into effect on February 2, and existing businesses have nine months to comply.
The regime marks Banco Central do Brasil’s most comprehensive attempt yet to manage its fast-growing but largely unregulated crypto sector. While the central bank has floated various proposals since 2019, progress has stalled due to institutional friction and industry opposition.
The challenge “was to find a way to reconcile innovation and security,” Gilneu Vivan, the bank’s director of regulation, said at a press conference, according to local news outlet Portal do Bitcoin. “The crypto market is highly dependent on technology and has very important anti-money laundering obligations. All of this requires guarantees that it will be well executed.”
Some of the banks’ rules, including capital requirements and timescales, came under attack from the crypto industry.
The capital level is surprising
Companies in the industry must have at least 10.8 million reais ($2 million) in capital, the bank said. Depending on the type of business, some companies must have at least 37.2 million reais. This is well above the 1 million-3 million reais proposed during the public consultation phase.
Bernardo Srur, president of the Brazilian Association of Cryptoeconomics (ABCripto), called the framework “positive and necessary” but criticized both the head bar and the short window to achieve compliance, which he said could discourage competition.
Businesses that fail to meet the compliance deadline, which includes proof of capital levels, cyber security controls, customer due diligence practices and risk assessments, will be barred from operating. Foreign companies active in the country must establish a local entity and transfer activities under this structure.
The rules establish a new type of business entity: Sociedades Prestadoras de Serviços de Ativos Virtuais (SPSAVs), or Virtual Asset Service Providers (VASPs), which must now be licensed by the central bank and are divided into three categories based on the services they offer: intermediaries, custodians and brokerage firms.
FX controls hit self-managed wallets
The framework also brings more types of crypto transactions, including those involving stablecoins, within Brazil’s currency and cross-border capital control regime. These include international cryptocurrency payments, transfers to and from self-custodial wallets, and crypto-to-fiat transactions.
Firms authorized to operate in Brazil’s foreign exchange markets, including VASPs, can carry out these transactions, but with restrictions that include a cap of $100,000 per transaction. transaction. From May 4, they must report these transactions monthly to the central bank with details including customer details, asset types, amounts in reais and links between counterparties.
VASPs are also barred from handling physical currency (domestic or foreign) and from using foreign cash in crypto purchases.
The goal, officials say, is to reduce regulatory arbitrage and bring transparency to crypto’s role in Brazil’s balance of payments and economic statistics.
