Brazil’s Central Bank to Supervise Crypto Service Providers
- Brazil has the biggest crypto market in South America.
- Several crypto service providers, such as Binance and Coinbase, have expanded their operations to the Latin American nation.
- Binance partnered with Mastercard in January to provide prepaid crypto cards to Brazilian users.
Brazil’s President Luiz Inácio Lula da Silva has approved a law that specifies the roles of securities regulators and the country’s central bank in regulating digital asset providers. Government Decree No. 11.563 states that tokens that qualify as securities will be supervised by the Comisso de Valores Mobiliários or CVM. The CVM is identical to the United States Securities and Exchange Commission. The legislation also grants the Central Bank of Brazil the authority to regulate and oversee crypto service providers.
According to a Bloomberg report, the law sets measures to prevent financial crimes like money laundering and terrorism financing. Interestingly, noncompliance could possibly result in jail time. All crypto service providers are now required to register before operating in Brazil.
Brazil’s push for clarity could trigger a boom in its crypto sector as more crypto service providers could turn to the nation’s growing market. Mercado Bitcoin, an exchange with more than 3 million users and a trading turnover of up to $5 billion, is already located in Brazil.
Brazil Pushes for a CBDC
The new law was signed just as Visa, Mastercard, and other significant payment companies are preparing to collaborate to launch a pilot project for a central bank digital currency, or CBDC, in Brazil. The country’s central bank plans to launch a CBDC by 2024. The CBDC, according to the central bank, will strengthen financial inclusion in Brazil as well as encourage innovation.
Once it launches its CBDC, Brazil will join the Bahamas, Nigeria, the Eastern Caribbean, and Jamaica as countries that have issued their own CBDCs. Several countries have shown interest in CBDC, while others see it as a risk-free alternative to cryptocurrencies.
Crypto activities in Brazil have soared in recent months, and several crypto service providers have expanded their operations in the South American nation. In March, Coinbase announced a collaboration with local services to increase its presence in Brazil.
The partnership with Brazilian payment solutions Ebanx and Pix will help locals purchase crypto using the Brazilian real and also allow users to make deposits and withdrawals from Coinbase accounts in real.
As the United States continues its fight against major crypto service providers, Brazil, Dubai, and Europe have become possible targets for companies seeking regions with friendly policies.
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