The President of Brazil – Luiz Inácio Lula da Silva, simply known as Lula – assigned the country’s central bank to supervise the local cryptocurrency sector. The legislation that comes into force on June 20 will give the financial institution jurisdiction to determine which firms can operate in the local market.
The bank will also cooperate with Brazil’s Securities and Exchange Commission (the Comissão de Valores Mobiliários, or CVM) to oversee coins deemed as securities.
President Lula recently signed an official decree that empowers Banco Central do Brasil to regulate the domestic cryptocurrency industry. As stated in the order, companies willing to offer digital asset services will have to obtain the bank’s permission.
The institution will also introduce a licensing system for crypto providers, where all participants must register. Monitoring if entities abide by anti-money laundering procedures and whether they are linked to any criminal activities, such as financing terrorism, will also be under the central bank’s scope. The upcoming changes will go into effect on June 20.
Brazil’s SEC will play a role in the regulatory process, too. The agency and Banco Central do Brasil will supervise cryptocurrencies labeled as securities. However, current law does not clarify which digital assets fit into that category and which are considered commodities.
Setting clear standards for dealing with digital assets could make the country more attractive to crypto enthusiasts. Brazilians have already shown their sympathy towards the sector. A survey conducted by Gemini last year determined that over 40% of the locals own digital currencies.
Two of the leading cryptocurrency exchanges – Binance and Coinbase, which have recently been targeted by the US SEC, have launched different crypto initiatives in the largest country by landmass in South America.
Binance partnered with the multinational financial services giant – Mastercard – in January this year to introduce a prepaid card in the region. The move came as a result of the company’s ambitions to “broaden the connection between traditional finance and crypto.” The card is accepted in every shop that uses Mastercard’s payment services.
Coinbase teamed up with Brazil’s settlement system Pix to offer additional cryptocurrency services. The partnership enables the purchase of digital assets using Brazilian reals and allows withdrawals and deposits in the country’s national currency.