Brazil increases regulation of crypto-asset market

The new law provides that virtual asset service providers (VASPs) may only operate in Brazil with prior authorisation from a federal public administration body or entity, defining virtual assets as “a digital representation of value that can be traded or transferred by electronic means and used to make payments or for investment purposes”. This does not include domestic or foreign currencies or securities and financial assets under existing regulation. The federal public administration body or entity authorising the operation of a VASP will establish the conditions and deadlines for which financial assets will be regulated.

Under the law, VASPs must operate within certain guidelines, including good governance practices, transparency in operations and a risk-based approach, provision of information security and protection of personal data. They must also be in line with international anti-money laundering (AML) and counter-terrorist financing standards.

Non-compliance with the law could result in a fine and between four and eight years of imprisonment. Repeat offenses will see the original penalties of Brazil’s AML laws increased by a third.

The regulations will be put in place 180 days after the publication of the law, giving VASPs in Brazil until June 20, 2023 to adapt to the rules.

Sources

• Senado Notícias (Portuguese)
• Koury Lopes Advogados (Portuguese)
• Presidência da República (Portuguese)