Episode #174: Winners and Losers of Brazil’s New VASP Rules

Brazil's Central Bank released long-awaited rules for cryptocurrency businesses this week. Who comes out ahead under this new framework?

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Olá pessoal!

You surely saw that Brazil’s Central Bank released much-anticipated VASP regulations earlier this week. These rules have been in the works for three years now, and they bring significant clarity to the market and serve to (in some ways) level the playing field.

To discuss what’s in these regulations, timelines and likely winners and losers, I’m joined by Carlos Russo , CEO and co-founder of Bloquo , and Cesar Carvalho , partner at Baptista Luz Advogados

Both Carlos and Cesar serve on the government relations team of the ABToken trade association and have been heavily involved in the rulemaking process.

The VASP regulatory package comprises three primary resolutions addressing authorization requirements, operational compliance standards, and the integration of crypto assets into Brazil’s foreign exchange market.

The framework represents the Central Bank’s attempt to balance market innovation with financial stability, though several contentious issues remain under discussion.

Key Themes and Takeaways

Authorization Timeline and Process

• Regulations take effect February 2, 2025, with VASPs required to file formal authorization requests within nine months
• A phased two-stage approval process is expected to span approximately three years from initial filing to final authorization
• Companies must demonstrate operational readiness immediately upon filing, including compliance with cybersecurity, risk management, and AML obligations

Capital Requirements Create Market Pressures

• Minimum regulatory capital ranges from R$11.2 million to R$37.2 million depending on the business model
• Industry advocates are pushing for a phased contribution calendar allowing companies up to two years to meet capital requirements
• Smaller players face significant barriers to entry, potentially consolidating market share among established entities

Level Playing Field—With Asterisks

• All VASPs—domestic and international—must now report customer transactions to tax authorities with no loopholes
• The framework addresses longstanding complaints from local exchanges about uneven compliance standards
• However, concerns persist about regulatory advantages favoring traditional financial institutions (”TradFi”) over new VASP entrants

Foreign Exchange Market Integration

• Stablecoin transactions are now formally incorporated into Brazil’s regulated FX market
• VASPs face stringent reporting requirements aligned with traditional FX brokers
• This legitimizes crypto-based cross-border payments within Brazil’s regulatory framework

The regulations represent a conservative, iterative approach from the central bank, which has signaled openness to continued industry dialogue.

For stakeholders, the coming months will be critical as firms assess their compliance pathways and the industry advocates for refinements to ensure genuine competitive parity across all market participants.

You can connect with Carlos and Cesar on Linkedin.

Have a great week everyone,

-AWS

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