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The Central Bank of Brazil (BCB) has unveiled its long-awaited proposals for regulating the crypto-asset market, including definitions and authorisation requirements.
The proposals come as the country appears to be experiencing a crypto boom — its net imports of crypto-assets in the nine months through to September 2024 increased by 60.7 percent over the same period in 2023, already exceeding the full-year total for last year.
This is despite some moves to restrict crypto use in the country, including a ban on crypto payments in gambling.
The BCB’s consultation has the intention of creating a legally secure environment that ensures stable, efficient and transparent operation for crypto-asset service providers while addressing key risks and vulnerabilities in the sector.
Key proposals
Two significant regulatory proposals are now open for public input. Public Consultation 109/2024 focuses on virtual asset services as outlined in Law 14,478 of 2022.
This establishes guidelines for the formation and operation of companies in the market, specifying which central bank-authorised institutions may provide these services and what fees may apply.
The proposal categorises virtual asset providers into three types:
- Virtual asset intermediaries, which handle the negotiation and distribution of virtual assets.
- Virtual asset custodians, which manage the safekeeping of virtual assets.
- Virtual asset brokers, which perform the functions of both intermediaries and custodians.
The proposal also details governance requirements, minimum capital and net equity standards, as well as specific obligations based on each business type.
Public Consultation 110/2024, meanwhile, sets out the authorisation process for crypto-asset service providers.
It includes differentiated regulatory treatment for entities already operating in the virtual asset market and aligns closely with authorisation procedures for companies in the foreign exchange and securities markets.
The BCB has announced plans to introduce further regulation by the end of 2024, aiming to address how virtual asset service providers may operate in the Brazilian foreign exchange market.
A long-awaited development
The crypto industry has been expecting these proposals for some time, following a public consultation to gather feedback from the public on how to regulate the market launched in January 2024.
The upcoming regulatory framework is intended to bolster transparency and security in virtual asset transactions, and the latest proposals are available for review and comment until February 7, 2025.
