Regulation
Brazil’s central bank to finalize crypto regulations by 2024
On May 20, the Central Bank of Brazil (CB) reaffirmed its commitment to finalizing crypto regulations by the end of 2024. The initiative aims to establish operational standards and clear authorization processes for crypto providers. virtual asset services (VASP).
The BC aims to ensure a secure environment for crypto transactions in Brazil by improving transparency and investor protection. This regulatory framework will target inappropriate practices harmful to consumers, such as scams and fraud.
Complete schedule of crypto regulation by the Central Bank of Brazil
This regulatory approach follows Decree 11.563 of 2023. It gives British Columbia the power to supervise VASPs while retaining the roles of the Securities and Exchange Commission (CVM) and the Special Secretariat of Federal Revenue of Brazil (RFB).
According to Nagel Lisanias Paulino of the British Columbia Department of Financial System Regulation, the goal is to refine the operational standards and authorization processes of VASPs by establishing minimum requirements and promoting appropriate customer interaction. Under Law 14,478 of 2022, VASPs must obtain authorization from British Columbia to operate in Brazil. The operational activities of VASPs include the offering, intermediation and custody of crypto assets.
Learn more: Crypto regulation: what are the advantages and disadvantages?
“The regulation aims to provide minimum requirements for service providers to carry out activities on virtual assets, also committing to provide appropriate practices in their dealings with their customers. The idea is to move towards the construction of normative acts that will deal with virtual asset service providers,” Paulino explained.
The regulatory process will evolve in stages, reflecting the growing understanding of regulators and international guidelines. Key steps for 2024 include developing a second public consultation on the performance and authorization of providers, establishing internal planning for stable coin regulation and improvement of the complementary framework for VASP activities.
Additionally, the BC will collaborate with other agencies to address specific issues related to virtual assets, including regulating stablecoins in payments and the foreign exchange market. British Columbia aims to finalize regulatory proposals based on lessons learned from public consultations. This collaborative approach ensures that regulations benefit from public and market input, producing high-quality, well-informed standards.
Furthermore, the regulations aim to maintain the stability of the national financial system. It will focus on various aspects, such as fight against money launderingcombating the financing of terrorism and monitoring suspicious activities.
Regulatory clarity in Brazil comes at a pivotal time. A recent Kaiko report reveals significant growth in the Brazilian crypto market. Despite recent market corrections, Brazilian real (BRL) trading volumes are up 30% compared to last year.
Learn more: Stablecoin Regulations Around the World
Weekly trading volume in BRL. Source: Kaiko
Additionally, from January to early May 2024, the trading volume of BRL-denominated cryptocurrencies reached $6 billion. This figure makes Brazil the largest market in Latin America (LATAM) and places it seventh among global fiat currencies.
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