Brazil’s central bank implements comprehensive crypto regulations, requiring licensing for service providers and subjecting crypto activities to foreign exchange and capital market rules. Existing companies have until Feb. 2 to comply with the new regime, which includes capital requirements of 10.8 million to 37.2 million reais.

Banco Central do Brasil’s new framework aims to balance innovation and security in the crypto sector. Companies must meet capital requirements, cybersecurity controls, customer due diligence practices, and risk assessments to operate. Firms failing to comply by the deadline will be barred from operating, with foreign companies required to establish a local entity.

The regulations establish a new business entity, Virtual Asset Service Providers (VASPs), categorized by the services they offer: intermediaries, custodians, and brokerages. Crypto transactions, including stablecoins, fall under Brazil’s foreign exchange and cross-border controls, with VASPs authorized to conduct these transactions with restrictions.

Authorized firms must report transactions monthly to the central bank starting May 4, detailing client information, asset types, amounts in reais, and counterparties. VASPs are prohibited from handling physical currency and using foreign cash in crypto purchases to reduce regulatory arbitrage and bring transparency to Brazil’s economic statistics.

Read more at Yahoo Finance: Brazil’s Central Bank Sets Crypto Rules, Establishes up to $7M Capital Bar for Firms