Brazil has taken a significant step towards regulating the cryptocurrency market by issuing a new law. The law, which will go into effect on June 20, designates the central bank as the regulatory body responsible for authorizing and supervising virtual asset service providers.
Key Points of Brazil’s Cryptocurrency Law
Published in the Official Gazette of the Union on Wednesday, Decree 11,563 establishes the Central Bank as the entity in charge of regulating services involving cryptocurrencies, also referred to as “virtual assets” in the text.
The decree, signed by President Luiz Inácio Lula da Silva, Minister of Economy Fernando Haddad, and President of the Central Bank Roberto Campos Neto, grants the central bank the authority to authorize and monitor entities operating in the cryptocurrency market.
Notably, the decree maintains the Securities and Exchange Commission’s (CVM) role in regulating cases where virtual assets are considered securities. It ensures that the responsibilities of both the central bank and the CVM are clearly delineated, promoting effective sector oversight.
The newly sanctioned law, originating from Bill 4,401/2021, aims to establish a comprehensive regulatory framework for cryptocurrencies in Brazil.
While the law defines virtual assets as digital representations of value that can be traded electronically for payments or investment purposes, it explicitly excludes fiduciary currencies, shares, loyalty, and mileage programs from this definition.
Under the law, virtual asset service providers are required to obtain prior authorization from the central bank to operate in the country. This move aims to ensure that companies comply with regulatory standards and maintain the integrity of the cryptocurrency market.
Currently, some foreign companies operate in Brazil without an official presence, making the authorization requirement an important step toward enhancing transparency and accountability.
With the central bank assuming the role of regulator, it will possess various powers and responsibilities. The bank will have the authority to authorize operations, transfers of control, mergers, and spin-offs of virtual asset service providers.
Furthermore, it will establish conditions for positions in these companies and authorize individuals to hold management positions.
The enactment of this law and the subsequent appointment of the central bank as the regulator reflect Brazil’s commitment to creating a secure and transparent cryptocurrency market.
However, by providing a clear regulatory framework, the country aims to foster innovation, protect investors, and prevent illicit activities in the cryptocurrency sector.
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