Brazil's Central Bank Aims to Finalize Crypto Regulation by End of Year

By Karin Interfector
Published in News
May 22, 2024
2 min read
Brazil's Central Bank Aims to Finalize Crypto Regulation by End of Year

Brazil’s central bank has drafted a plan to regulate crypto service providers. While the main ideas are established, the monetary authority is taking a measured, gradual approach to finalize the project. Their goal is to create rules that increase transparency around cryptocurrency investments’ benefits and risks.

Under the 2022 Law 14,478, crypto asset service providers can only operate in Brazil with central bank authorization. These companies offer direct access to many cryptocurrencies, intermediation, and custody of digital assets. According to Nagel Lisanias Paulino, an institution representative:

“Regulation plays a crucial role in uncovering unethical practices surrounding crypto assets, which can harm consumers and businesses through scams and frauds. We want to establish basic requirements for service providers and promote ethical conduct in their interactions with clients… The goal is to develop regulatory frameworks that support businesses, covering various commercial and authorization aspects”.

The most recent legislation regarding crypto providers dates back to 2022. However, it wasn’t until a congressional hearing in 2023 that we started to gain clarity on timelines. During this hearing, Otavio Damaso, the Central Bank’s Director of Regulation, mentioned that a comprehensive regulatory framework would be finalized by June 2024, marking a significant step towards a digitalized future within the country.

In December 2023, the first public consultation was conducted to gather different opinions from society and address aspects not covered in the 2022 law. Another consultation is planned for the second half of this year.

According to the central bank:

“The second public consultation, now focused on regulatory texts, aims to use the initial input to, once again with broad support from society, establish a robust regulatory framework”.

Therefore, the central bank’s plan will undergo thorough review and refinement processes, integrating recommendations from international organizations. Key actions are outlined on the institution’s website, including the upcoming second public consultation and guidelines regarding stablecoin regulation. Additionally, the monetary authority emphasizes its dedication to preserving the financial system’s stability, highlighting the importance of anti-money laundering and counterterrorism financing measures.

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Regarding Brazil’s crypto ecosystem.

Last week, news emerged in anticipation of this year’s municipal elections —with the first round scheduled for October 6 and the second for the 27th—: the Superior Electoral Court decided to prohibit cryptocurrency donations to finance political parties and electoral campaigns. This prohibition will remain in effect until the end of the elections.

“The payment of electoral expenses with virtual currencies and pre-paid cards managed by third parties is prohibited”.

The organization defended its position by stating that its objectives include “ensuring transparency and proper monitoring of donations to political campaigns”. According to the institution, it must protect elections against “irregular or illicit practices”.

On the other hand, it’s important to mention that at the end of April, a report from Citigroup Inc. came out, highlighting Brazil as one of the top leaders in digital currency initiatives across Latin America. For further details, click here.

Don’t forget to keep up with us on social media and subscribe to our Newsletter. We share weekly educational content covering Blockchain, e-commerce, and cryptocurrencies, along with fascinating news. Plus, we’re diving deep into the development of Hamza.biz, the first Web3 e-commerce platform powered by the Loadpipe protocol. We aim to give users more freedom by providing access to many cryptocurrencies and cheap transactions. Click here to check out our roadmap for Hamza.

Further news:


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