Reinaldo Rabelo, CEO of Latin America’s first crypto unicorn Mercado Bitcoin (MB), expects Brazil’s Central Bank to define specific rules for the sector in the coming months, putting the country at the forefront of the cryptocurrency sector.
A loud and critical voice against foreign crypto exchanges and their modus operandi, he tells The Brazilian Report that MB has many possible paths ahead. He believes that blockchain-based technologies will transform and replace current systems in a wide range of industries, not just finance.
The legal framework for crypto assets, approved at the end of last year, went into effect on June 20, with the Central Bank named as the sector’s regulator. A draft regulation on licensing procedures for crypto platforms is expected to be released for public comment in the coming weeks. As previously suggested by TBR, the regulator is likely to follow a path similar to that of fintechs. This would mean more lenient regulatory capital requirements for crypto platforms than for financial institutions. However, exchanges will have to comply with rules designed to ensure the security of the system and its users.
It remains to be seen whether this fintech-like approach will be more in line with the segment’s original 2013 regulation — which required payment institutions to set aside the equivalent of 2 percent of their 12-month transactions — or whether it will be closer to the revised 2022 rule, which requires fintechs to gradually increase their capital requirements to 8 percent, plus a 2.5 percent capital conservation buffer, by 2025.
Mr. Rabelo points out that one of the most important aspects to ensure user safety was omitted from the legal framework: the segregation of investors’ assets and deposits from the companies’ capital.
In statutory terms, the Central Bank cannot determine that investors’ assets are untouchable in the event of the company’s bankruptcy....
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