Brazil authorizes its central bank to regulate crypto

Brazilian President Luiz Inácio Lula da Silva has signed a new law empowering the country’s central bank to regulate and supervise cryptocurrency firms while ensuring that tokens that qualify as securities remain under the authority of the securities regulator.

This development is in line with Brazil’s commitment to creating a regulatory framework for the country’s fledgling crypto space.

Brazil’s central bank takes charge 

In a new decree signed by President Lula, Brazil’s Central Bank now has the authority to regulate and supervise digital asset-focused businesses such as bitcoin (BTC) trading venues, centralized crypto exchanges, and wallet providers. This measure aims to ensure consumer protection and minimize the risks associated with digital assets.       

The decree also makes clear that Comissão de Valores Mobiliários (CVM), Brazil’s securities regulator, will continue to oversee token projects that are classified as securities. This regulatory approach acknowledges the unique nature of cryptocurrencies while giving room for innovation and ensuring the safety of investors’ funds.

Brazil’s crypto and CBDC adoption 

The new decree is coming at a time when Brazil is preparing to launch its central bank digital currency (CBDC). In collaboration with Visa and Mastercard, Brazil’s central bank aims to test the functionality of its CBDC platform. 

This aligns with the global trend of exploring digital currencies backed by central banks. 

Just like Brazil, other countries across various jurisdictions are now working on their regulatory frameworks for digital assets.

In Europe for instance, Ukraine has recently signaled plans to adopt the European Union’s recently-enacted Markets in Crypto-assets (MiCA) regulation. The framework aims to enhance transparency, disclosure, and authorization for the issuance and trading of crypto. 

On the other hand, regulatory dark clouds are still plaguing the web3 ecosystem of the United States, where SEC chair Gary Gensler has embarked on an onslaught against market participants.

Notably, lawmakers have introduced the SEC Stabilization Act, legislation aimed at restructuring the agency and removing Gensler as its chair. 

The coming years will likely witness significant developments in crypto regulation globally. It is expected that investors, policymakers, and regulators will continue to collaborate, to create frameworks that will enable a safer and more inclusive crypto economy.