#216: Central Bank Releases VASP Regulations After 3 Year Wait
New rules for crypto exchanges give big incumbents a systematic advantage
Olá pessoal!
Welcome back to Brazil Crypto Report for the week of November 3-7, 2025.
The big news for this week is that Brazil’s Central Bank has finally released regulations for cryptocurrency businesses in the country. The publication of these rules comes nearly 3 years after enabling legislation was passed and signed into law in 2022.
I recorded a podcast interview with Carlos Russo of Bluegreen (soon to be Bloquo) and Cesar Carvalho of b/luz Advogados about these new rules from. Both of them were heavily involved in the rulemaking process as representatives of ABToken’s government affairs team, and we break down in detail what these mean for the market.
Definitely worth a listen if you’re looking for an insider perspective here.
We’ll explore the new regulatory framework in detail below, but the TLDR is that the new rules:
Formalize crypto as part of Brazil’s regulated financial system
Raises safety and governance standards
Favors large incumbents over early-stage startups, and Tradfi players over crypto exchanges
Acknowledges stablecoins’ role in international payments by including them in the foreign exchange regulatory regime
Creates a clear path for global exchanges to operate in the country
Demands heavy capital and compliance investment
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Central Bank Releases VASP Regulations After 3 Year Wait
The Central Bank has published its long-awaited regulatory framework for companies operating in the crypto asset space.
These rules formally integrate crypto companies into the traditional financial system and introduce mandatory licensing for any firm aspiring to be a Virtual Asset Service Provider.
The regulations require every crypto company to obtain an authorization from the Central Bank. They also insert certain virtual-asset transactions - especially cross-border crypto payments and stablecoin transfers - into Brazil’s foreign exchange regime.
Practically, this means that service providers must meet the same requirements applicable to banks operating in the foreign exchange market. Banks, foreign exchange brokers and other entities authorized by the Central Bank will also be able to participate in this market alongside newly licensed VASPs.
The regulations spell out heightened security requirements following a series of frauds and hacks on fintechs and Pix technology providers this year. These include anti-money launder and counter terrorism financing measures, an information reporting regime and prudential capital requirements - none of which has formally existed until now for the digital asset industry.
There are some structural advantages favoring incumbents over the upstarts. For example, brokerages and smaller institutions can operate with a limit of US$500,000 per transaction, while crypto companies (VASPs) can only make international currency payments up to US$100,000 if the counterparty is not an institution authorized by the Central Bank.
The rules now prohibit the buying or selling of cryptocurrencies using foreign currency directly, such as using dollars to buy bitcoin.
Gilneu Vivan, director of regulation at the bank, said in a press conference:
“This structure will bring much more security to those who invest in crypto assets in Brazil.”
The rules comes into effect on February 2, 2026, meaning that companies must adapt to them ahead of that date in order to obtain a license. The reporting of foreign exchange transactions with crypto assets to the Central Bank begins on May 4.
Capital Requirements ☠️
Perhaps the biggest gut-punch in the rules are capital requirements that range from R$10.8 million (US$2 million) to R$37.2 million US$7 million), depending on the level of risk that the operator is engaged in. These figures are 10x higher than those proposed in the most recent public consultation.
Vivan, of the Central Bank, said of the regulator’s decision to impose these requirements:
“The crypto market is highly dependent on technology and has very important obligations related to preventing money laundering. All of this requires guarantees that it will be well executed. What we brought in the minimum capital note was a value that attempts to balance these two things.”
This framework mainly favors large crypto exchanges, banks (Nubank, Itau, Bradesco, etc) and brokerage firms, while almost certainly making it more difficult for small players operating in the market.
“This is a high amount compared to what was required of the first fintechs in Brazil,” said Isac Costa, president and director of the Brazilian Institute of Innovation and Technology.
Specifically with regard to capital requirements, the authority increased these amounts after a hack on a Pix technology provider that drained significant funds from banks’ reserve accounts.
For brokerages carrying out more complex operations, these requirements will be R$ 37.2 million, a massive increase from the R$3 million figure originally put forth in an earlier public consultation.
Larger companies will obviously have an easier time adapting to this, Erik Oioli of VSBO Advogados also told Valor, while others will need to make significant investments.
“On the other hand, the sector becomes more institutionalized, which tends to bring more stability and attractiveness to the market.”
Denise Cinelli, global COO and director of CryptoMarket Brazil said in a statement that these capital requirements are a major impediment:
“We wish to express our concern regarding the minimum capital requirement: the Central Bank is setting a base value of R$ 10.8 million for entry into the regulated regime. In practice, considering the current scale of our operation and the products we already offer, we would need approximately R$ 16 million to ensure the full continuity of our activities.
This doesn’t even take into account the launch of new products that we have scheduled for the next period, which would imply a further increase in this parameter.
I urge the Regulator to consider a phased or gradual review of this requirement, consistent with the company’s size, number of clients, business model, and operational risk.”
Bernardo Srur of ABCripto told Exame that the overall framework is “positive and necessary”, but the capital requirements are a tough pill to swallow:
“It is important to ensure that regulation strengthens market trust and integrity, but without creating disproportionate barriers that could limit competitiveness or discourage new entrants.”
The bank also reduced the waiting period for the rules to come into force from the typical 12 months to 90 days. Some see this as a positive development for financial institutions who want to operate in the market.
For example, this opens the door for Brazilian institutions to manage payment accounts for potential clients like international exchanges, as creating payment accounts for their own clients would increase the capital requirements.
Tatiana Guazzelli of Pinheiro Neto Advogados told Valor:
“The capital requirement is quite substantial, but it is among the potential measures to reduce the institution’s risk exposure. Security measures had to be adopted to prevent fraud such as those that have occurred recently.”
There is a also clear rule that crypto transactions on a global order book cannot be considered foreign exchange market operations, a major win for the industry.
Three types of VASPs
There will be three levels of VASP licenses, depending on activities that the entity is engaged in.
Intermediaries that offer wallets, manage portfolios, act as fiduciary agents, and operate in the foreign exchange market
Custodians that hold private keys and transfer funds on behalf of clients
Exchanges that do both functions simultaneously
An intermediary would likely fall into the R$10.8 million minimum capital requirement range, while brokerages providing more complex operations like staking would likely require R$37.8 million.
Crypto Debit Cards
The rules appear to pour some cold water on the “neobank gold rush” that Brazil has been witnessing, specifically companies that offer crypto card solutions that allow the user to hold a stablecoin balance in their wallet and use these for local payments via Pix or traditional card rails.
Under the new regime, it seems that these cards can only be issued by entities authorized by the Central Bank. Foreign issuers of these cards would need a physical presence in Brazil to operate.
No Privacy Coins
So-called “privacy coins” that facilitate anonymity, such as Monero and Zcash, will not be able to be offered by VASPS in Brazil.
International exchanges that want to operate as VASPs in the country will have to remove these assets from their local portfolio.
Asset Segregation
The rules require VASPS to hold maintain customer assets in separate, individual accounts - fully segregated from the company’s operating funds and assets.
Biannual independent audits will be required to demonstrate compliance with this. Further, exchanges will be required to provide monthly proof of reserve attestations.
Recall that this has been a hot button issue since it was stripped from the final version of the enabling legislation that was signed into law in late 2022.
It is important to point out that, to date, no law has been passed as of yet that recognizes or mandates asset segregation in the context of digital assets, though a bill has been approved by the Chamber of Deputies and is being considered by by the Senate.
Withdrawals to Self Custodied Wallets
Users can withdraw their assets from exchanges to self-custody wallets, but the exchanges must first identify the owners of these wallets and the transactions that are flowing to them from the exchanges.
This information, including the owner of the wallet and origin and destination of the funds, will need to be reported to the Central Bank.
The regulation does not detail how specifically this needs to be done, but market practice points to whitelists, two-factor verification by codes, and self-declaration of ownership, with the end goal of linking on-chain addresses with a Brazilian customer’s CPF (Social Security number).
While many are not happy about this rule, it is a major improvement from the bank’s original proposal - which was to completely ban withdrawals to self-custodied wallets altogether.
Gabriel Della, partner at Vault Capital, said in a statement:
Clearly, regulation prioritizes the prevention of money laundering and terrorist financing, which is urgently needed and has been facilitated by cryptocurrency and blockchain technologies.
But aside from that, the highlight is the minimum capital requirement and the “end of self-custody.” At least in the way we know it.
This puts an end to anonymous self-custody. A controversial trade-off between AML/CFT and the right to investor privacy.”
Information Reporting
All operations involving virtual assets — such as international transfers, payments of obligations linked to credit portfolios, transfers to self-custody portfolios, and the purchase, sale, or exchange of virtual assets for fiat currencies — will be treated as foreign exchange operations and, therefore, must be reported to the Central Bank.
Rodrigo Borges of Carvalho Borges Araújo Advogados told InfoMoney:
“Previously, there was already a tax obligation to report to the Receita Federal; now there is also an obligation to report to the Central Bank, within the same exchange information regime.”
Further, only authorized VASPs will be able to carry out these operations, under the supervision of the Central Bank.
Stablecoins and IOF
Incorporating stablecoins into the FX regulatory framework, will give the bank the ability to better supervise stablecoin inflows into the financial system.
It’s important to emphasize that this does NOT create a requirement to impose the IOF financial transactions tax on these operations. Rather, this will be a decision for the Receita Federal, Brazil’s tax authority, to address.
Thiago Severo of Panucci, Severo e Nebias Advogados, told Valor:
“As long as a stablecoin transaction remains within the crypto ecosystem, without conversion to reais or settlement via an authorized institution, there is no taxable event.”
Unfortunately, it seems highly likely that the Receita Federal will eventually IOF taxes on these operations.
Borges explained:
“Any movement of virtual assets abroad or from abroad to here will be considered an exchange operation, subject to foreign capital rules.
“Now there is greater transparency and control over operations, which facilitates eventual collection if that is the interest of the tax authorities.”
Lawyer and tax specialist Tatiane Praxedes explained that several legal loopholes still exist to avoid this outcome:
“There will still be many ways to contest any IOF charges in court. I don’t see a definitive decision until [at least] the entry into force of the regulation.”
Nicole Dyskant, founder of the regulatory startup RegDoor, argued that treating cross-border payments with stablecoins as foreign exchanges is the most controversial part of the regulation.
“This brings a compliance burden, but it strengthens the integration between the traditional financial system and the virtual asset market.”
The use of algorithmic stablecoins that do not have backing of underlying currency or securities are formally banned in Brazil under the new regulation. This is aligned with the GENIUS Act in the US, which, by requiring a 1:1 fiat currency backing and 100% liquid reserves, effectively prohibits the issuance of algorithmic or unbacked stablecoins in the US.
Alignment with International Standards
The rules bring Brazil into alignment with international best practices for digital asset regulation practices, though the minimum capital requirements are significantly higher than required in other jurisdictions like Europe.
The framework was inspired by Europe’s MiCA rules and Financial Stability Board recommendations, while adhering to Financial Action Task Force best practices on anti-money laundering.
“Abuse of Power,” Says Congressman
Federal Deputy Rodrigo Valadares was not happy at all with the new regulations and has introduced a measure in the Chamber of Deputies to annul the rules.
He argues that the bank exceeded its authority by altering how the country views stablecoins and opening the door for undue taxation via IOF or other means:
“(The rule) represents a profound transformation in the national financial architecture, with large-scale tax and economic impacts.
“Stablecoins have never been equated with foreign currency, nor is there authorization for the Central Bank to classify them in this way.”
He said that Brazil’s constitution authorizes Congress to intervene in this type of situation when a regulator oversteps its authority, and that the Central Bank’s rules “violate the principles of predictability and legal certainty” and would put local companies at a disadvantage vis-a-vis foreign companies.
Market Reaction + What Comes Next?
The industry more broadly was supportive of the new rules as a means of legitimizing the industry, integrating it more closely to the traditional financial system and providing clear rules of the road.
Regina Pedroso, executive director of ABToken, said in statement:
“The new regulatory framework brings much more security to those who invest in crypto assets in Brazil, by placing virtual asset service providers under the direct supervision of the Central Bank.”
But there will be winners and losers. As it stands currently, there will be no way for all of the smaller firms operating in the market to operate profitably and maintain full compliance.
Isac Costa predicted that a “banking-as-a-service” type of model may emerge in which regulated providers offer their infrastructure to other brands who wish to operate in the market.
“As the Central Bank has set a high bar—not only in terms of net worth, but also compliance and supervision—the market is likely to undergo a consolidation process.
Foreign exchanges may rethink their plans to operate in Brazil, as the new rules impose significant regulatory barriers. An alternative could be partnering with national exchanges, which would then act as local representatives to enable the offering of services to Brazilian investors.”
Attorney Rafael Steinfeld argues that the requirements will crush the estimated 80% of Brazilian crypto companies that are classified as small or medium-sized businesses.
Thiago Barbosa, an attorney with Salles Nogueira Advogados was surprised by how different the final text was compared to what was most recently proposed via public consultation.
“On the positive side, it is worth highlighting that the agency determined the new rules would only come into effect in February, allowing a reasonable amount of time for Virtual Asset Service Providers to adapt to the operational requirements.
On the other hand, it caused perplexity among companies to find that the regulation published by the Central Bank is about 80% different from the text previously published. The regulation…requires a minimum share capital more than 10 times greater than initially foreseen.”
YouTuber Peter Turguniev, with almost 900k followers posted a video telling his followers that the regulation “ensures that cryptos in Brazil become meaningless.”
“It seems complicated to me, it ends up punishing brokers here in Brazil a lot, giving more chances to brokers outside of Brazil. In the end, no advantage for the market itself, right? It’s a regulation to end the cryptocurrency market in Brazil.”
Luiz Parreira, founder of the bitcoin exchange Bipa, said on X that financial services will stagnate and become more expensive as a result of these rules.
Popular bitcoiner and libertarian influencer Renato Trezoitao urged his followers to get their coins off of exchanges before it’s too late
Economist and influencer Fernando Ulrich argued that the objective of this regulation is not to protect users, but rather to exert more control over the sector.
“We can’t be naive and think that regulation is only to protect users, to regulate the sector, which was completely unregulated, a kind of Wild West. It hasn’t been that way for a long time. In fact, all regulation, including this one, is about more control.”
The rules should, in theory, give retail and individual investors greater confidence when allocating to the crypto market - provided that they use an entity that is licensed by the Central Bank and authorized to operate in Brazil.
Foreign brokerages operating in Brazil must comply with new regime within 270 days, or they must stop soliciting investors from the country.
Regardless of the company or broker the investor uses, there will be minimum standards guaranteed by the Central Bank. Foreign exchanges will need to establish a local entity and follow the same rules as Brazilian companies.
This means that foreign exchanges will need to begin reporting customer transaction information to the Receita Federal - something they have not been required to do beforehand.
If an exchange does not obtain authorization within nine months, starting in February of next year, it must cease its activities, notify clients, and guarantee the transfer of assets to authorized providers.
Consolidation is Inevitable
Thiago Amaral, a partner at Barcellos Tucunduva Advogados, argued that a consolidation of crypto exchanges in the Brazilian market is virtually guaranteed, due to the stringent new rules. He told Livecoins:
“The trend is that we will see a concentration movement, with the exit of smaller companies that will not be able to meet regulatory requirements. On the other hand, it is a moment of great opportunity for those who know how to structure themselves.”
CoinTelegraph Brasil CoinTelegraph Brasil Portal do Bitcoin Livecoins Exame CoinDesk The Block
🗞Brazil Crypto News Rundown
📈 Markets
Minteo launched BRLM, a Brazilian real pegged stablecoin, on the Polygon blockchain. (CoinTelegraph Brasil)
Murilo Cortina of QR Asset reckoned that the recent surge in crypto-ETFs is just the opening phase, and that by 2026 the market will shift from pure bitcoin exposure into niche products like Ethereum, Solana, DeFi strategies and tokenised real-world infrastructure. (CoinTelegraph Brasil)
Mercado Bitcoin reports that the trading volume of U.S.-dollar-denominated stablecoins in Brazil has tripled from 2024 to 2025, driven by over 40,000 new investors and a nearly 190% jump in average transaction size. (CoinTelegraph Brasil)
Mercado Bitcoin is investing $58 million in Portugal for product development, hiring, and integration with the country’s financial system. (CoinDesk)
📲 Adoption
Central Bank president Gabriel Galipolo explained for the first time the reasons for discontinuing the use of blockchain in the Drex project. Specifically that the technology was not viable. In an interview in Sao Paulo, he explained
“So, what we realized is that, after four years, the technology has not proven viable. Today, there are ways to achieve what we want, which is to have this network with tokenized assets, with this certification issue, which will provide security and liquidity so that you can take out a loan or make a transaction with smart control in a simpler way, with other technologies.”
“The Central Bank’s mandate is not to use a new technology, the Central Bank’s mandate is to solve problems for the population.”
“When this network will be operational and how we will do it, we will announce properly later.” (Valor) (CoinTelegraph Brasil) (Portal do Bitcoin) (Exame)
Brazil ranks 11th highest globally for fraud risk and is the worst-performing country in Latin America according to Sumsub’s “Global Fraud Index 2025,” with rising threats from AI-driven biometric scams and social engineering attacks in the fintech and crypto sectors. (CoinTelegraph Brasil)
The Central Bank is rolling out a new instrument within the Pix instant-payment system to combat increasingly sophisticated fraud tied to crypto-related purchases.
Despite delays and technical setbacks in the Drex CBDC pilot, Brazil remains a global leader in digital finance thanks to the strength of Pix, Open Finance and Gov.br, former Central Bank president and current Nubank executive Roberto Campos Neto argued during a speech at a Milken Institute event in Sao Paulo.
“What we need to do in Brazil now is ensure that we have a system that incentivizes banks to tokenize their assets, so that they no longer see their company’s assets as entries on an account, but rather as tokens.” (CoinTelegraph Brasil) (Exame) (Exame)
CNN Brazil will launch the program “Crypto na Real” on November 18th, airing within CNN Money, with the goal of explaining how cryptocurrencies impact the real economy and create new business opportunities. (CoinTelegraph Brasil)
A user in Brazil mistakenly paid R$ 554,000 in fees or mis-sent funds while intending to send just R$ 52 worth of Bitcoin. (Portal do Bitcoin)
🏛 Policy, Regulation and Enforcement
The CVM, Brazil’s securities regulator, issued a stop order against 24 cryptocurrency platforms operating in the country, declaring them unauthorized as intermediaries of securities and requiring the immediate suspension of any public offers of related services. (CoinTelegraph Brasil) (Valor)
Brazil will enforce new minimum-age guidelines for digital services starting March 2026, requiring age-verification and parental oversight. Messaging apps from age 12, AI chatbots like ChatGPT and Gemini from 14, full social networks from 16, and adult/️gambling platforms from 18. (CoinTelegraph Brasil)
Legislation has been introduced to allow the sale of cryptocurrencies like bitcoin seized during investigations, treating them like foreign currency or securities to undermine organized-crime funding. (CoinTelegraph Brasil)
Juan Pablo Correa Gossweiler, president of ONR (which operates Brazil’s electronic real estate registry system), told CoinTelegraph Brasil that tokenization is not ideal or sufficient technology for the country’s real estate market because holding tokens does not equate to ownership of property under current law.
New legislation proposes a legal framework for real estate tokens and envisions combining blockchain-based platforms with the country’s national property registry. (CoinTelegraph Brasil)
Federal Police commenced Operation Coffee Break against a public-contracting fraud scheme involving municipal governments that laundered money through cryptocurrencies; among those targeted is Carla Ariane Trindade, a former daughter-in-law of Lula. (Portal do Bitcoin)