Key Points
- Brazil’s central bank has released new regulations for the crypto market. The regulations will come into effect in February.
- The rules extend anti-money laundering and anti-terrorism financing regulations to virtual asset service providers.
- The move comes amid a surge in crypto use in Brazil and concerns about illicit activities, especially with stablecoins.
- Transactions involving stablecoins pegged to fiat currencies will now be treated as foreign exchange operations.
Brazil’s central bank released its long-awaited rules for trading virtual assets, such as cryptocurrencies, on Monday. The new regulations will apply existing anti-money laundering and anti-terrorism financing rules to companies that provide virtual asset services.
Latin America’s largest economy had already approved a legal framework for cryptocurrencies back in 2022, but it couldn’t be fully implemented until the central bank provided these detailed regulations. The bank held four public consultations before finalizing the rules.
In the meantime, the use of crypto has soared in Brazil. This prompted central bank governor Gabriel Galipolo to express concerns, especially about the growing use of stablecoins—cryptocurrencies pegged to real-world assets like the U.S. dollar—which are often linked to illegal activities.
Gilneu Vivan, the central bank’s director of regulation, said at a press conference that the “new rules will reduce the scope for scams, fraud, and the use of virtual asset markets for money laundering.”
The new regulations will take effect in February. They will cover the authorization process for foreign exchange and securities brokers, as well as virtual asset service providers.
Policymakers have noted that stablecoins, which are less volatile than cryptocurrencies like bitcoin, are often used for payments rather than investments. Many users turn to them to get around the more heavily supervised and taxed traditional payment systems.
Under the new rules, any purchase, sale, or exchange of virtual assets pegged to a fiat currency (such as the U.S. dollar) will be treated as a foreign exchange operation. The same will apply to international payments or transfers made with virtual assets.
The regulation also extends existing rules on customer protection, transparency, and anti-money laundering to virtual asset service providers. The central bank added that the new framework includes requirements for governance, security, internal controls, and other compliance duties.
