Market Roundup: Central Bank will be more rigid on crypto players

Central Bank will demand more from crypto players than previously expected

Last Thursday, the Brazilian Central Bank launched the first public consultation on the regulation of the crypto sector. Days before, in a weekly live broadcast, Antônio Marcos Guimarães, a consultant at the Financial System Regulation Department, had already outlined some of the rules on the authority’s radar.

State of play. Contrary to what experts and industry executives had previously suggested, the authority will be more rigorous with crypto players than anticipated. 

• Months ago, the general expectation was that the regulator was drafting a fintech-like approach that would require crypto players to do what it already requires of payment institutions, i.e., more lenient regulatory capital requirements than those for financial institutions.

First hints. According to Mr. Guimarães, the Central Bank will divide companies in the sector into two categories: providers of blockchain technology for third parties and virtual asset service providers (the so-called VASPs). It is the latter category that will be on the Central Bank’s radar. He also said that:

• Crypto exchanges will fall under the VASP classification and will have to follow anti-money laundering rules similar to those of banks.
• Norms to prevent and combat money laundering and terrorist financing risks, known as ML-FT, should include measures against “theft and hacking.”
• In addition, conduct of business and prudential rules will be determined by the nature and complexity of the services offered, not by the size of the companies.
• A separate licensing regime. It is expected that existing...