The Central Bank of Brazil is considering implementing new regulations for the cryptocurrency market, including charging IOF (Tax on Financial Operations) on transactions with stablecoins and requiring exchange licenses for companies operating with digital assets.
These measures aim to align the virtual asset sector with traditional financial regulations, promoting greater transparency and control. However, experts warn that the creation of a “local book” on exchanges, where buy and sell orders would be carried out only by Brazilians, could result in a phenomenon known as “Kimchi Premium”. This phenomenon occurs when the price of Bitcoin in Brazil is 2% to 10% higher than the global average, due to lower local liquidity and greater potential for price manipulation.
To mitigate this risk, the Central Bank proposed the contracting of “essential services”, allowing virtual asset service providers to import liquidity from the global market. However, the inclusion of stablecoin operations in the foreign exchange market, as proposed in Public Consultation No. 111, could imply additional compliance costs and the incidence of IOF of up to 1.1% for Brazilian users, regardless of whether they operate on national or international platforms.
These proposals are under analysis and could significantly impact the cryptocurrency market in Brazil, affecting both investors and companies operating in this sector.
The Central Bank of Brazil is promoting three public consultations (CP 109, CP 110 and CP 111) to regulate the cryptocurrency market in the country. These initiatives aim to establish clear guidelines for virtual asset service providers (VAPs) and integrate cryptocurrency operations into the traditional financial system.
Public Consultation 109/2024: Constitution and Operation of PSAVs
CP 109 proposes the regulation of PSAVs, defining their constitution, operation and the institutions authorized to operate in this sector. The proposal suggests the creation of three types of PSAVs:
• Virtual Asset Intermediaries: responsible for intermediating the negotiation and distribution of virtual assets.
• Virtual Asset Custodians: responsible for the custody of these assets.
• Virtual Asset Exchanges: which simultaneously perform the functions of the two previous ones.
The minimum limits for share capital and paid-in equity are proposed as follows:
• Intermediaries: R$ 1 million.
• Custodians: R$ 2 million.
• Exchanges: R$ 3 million.
Furthermore, the Central Bank proposes that traditional financial institutions, such as commercial banks and Caixa Econômica Federal, may act as intermediaries and custodians of virtual assets, as long as they operate with payment accounts.
Public Consultation 110/2024: PSAV Authorization Processes
CP 110 establishes the authorization processes for PSAVs, detailing the requirements for obtaining a license to operate in the virtual assets market. The proposal includes the requirement to prove the lawful origin of funds, compatible infrastructure, unblemished reputation and technical capacity of administrators.
Public Consultation 111/2024: Integration of Cryptocurrencies into the Foreign Exchange Market
CP 111 seeks to integrate cryptocurrency operations into the traditional foreign exchange market, allowing PSAVs to operate in international transfers involving virtual assets and operations with stablecoins pegged to foreign currencies. However, the proposal includes a ban on transfers of stablecoins to self-custodial wallets, which has generated controversy in the sector.
These public consultations are open for contributions until February 7, 2025 (CP 109 and CP 110) and February 28, 2025 (CP 111). After this period, the Central Bank will analyze the suggestions received and may publish the final regulations, with a six-month adaptation period for companies to adapt to the new rules.
Enter the Central Bank website!