Cryptocurrency: What are the new regulations affecting virtual asset providers in Brazil?

Brazilian President Luiz Inácio Lula da Silva signed into force a bill in June to designate the Central Bank as the main supervisor of the cryptocurrency economy, a significant step towards regulation in the sector.

During former president Jair Bolsonaro’s tenure, the Brazilian Senate passed a bill in April 2022 that governs virtual assets, including Bitcoin and tokens. The bill defines cryptocurrencies as "digital representations of value that can be transferred, stored, or traded electronically." It also establishes a regulatory framework for cryptocurrency exchanges and service providers. After more than a year, with delays attributed to the presidential change of office, Lula has given the green light to the proposal.

Additionally, Brazil’s Central Bank announced plans to launch a public consultation on the regulation of cryptocurrencies in the next six months. The consultation will be open to the public and will allow stakeholders to provide feedback on the government’s proposed measures. The Lula administration has said that it is committed to regulating the virtual asset market in a way that protects investors and promotes innovation.

The Central Bank has also selected 16 pilot proposals for implementing the "digital Real" to create a digital currency for the country, state news agency Agencia Brasil announced last month. Caixa Econômica Federal, a member of a consortium that includes companies Elo and Microsoft, was among those selected. Banco do Brasil is also on the list.
The digital Real proposal has been met with mixed reactions. Some experts people believe that it is a necessary step to modernize the Brazilian financial system, while others are concerned about the potential risks of a digital currency, such as its impact on financial privacy and monetary policy.

According to a CoinMarketCap report published last week, Brazil accounted for 6.75% of all crypto users worldwide in the first half of 2023, only behind the US, India, Turkey, and Germany. Spain is the only other Ibero-American country in the Top 20 list, with 2.92% of global users.
A 2022 survey by Triple-A determined the most used cryptocurrency in Brazil is Bitcoin, followed by Ethereum, Tether, Binance Coin, and XRP.