The Brazilian Cryptoeconomics Association (ABcripto) sent its contributions to Public Consultations 109/2024, 110/2024, and 111/2024 of the Central Bank of Brazil (Bacen) on February 28th, which establish the bases for the regulation of virtual asset service providers (PSAVs). The entity positively assesses the proposals but suggests adjustments to strengthen legal certainty, ensure investor protection, and preserve Brazil’s competitiveness in the global scenario.
According to Bernardo Srur, CEO of ABcripto, the sector’s regulation needs to balance innovation and consumer protection without imposing excessive restrictions on companies. “Regulatory progress is essential to provide market predictability and encourage long-term investments. Our priority is to ensure rules that guarantee customer safety, promote innovation, and position Brazil as a competitive environment for digital businesses. The Central Bank has been engaging in an open and technical dialogue, and we remain committed to contributing to a modern and efficient regulatory framework,” says Srur. ABcripto’s contributions were collaboratively drafted by its members, led by the Central Bank and Taxation, Exchange, and Stablecoins Working Groups, and include suggestions to improve sector regulation.
The full contributions are available on site da ABcripto
Check out the main contributions of ABcripto to the Central Bank
Public Consultation 109/2024 – Regulation of PSAVs
- Asset Segregation and Risk Management: Ensuring the separation between the assets of PSAVs and client assets is essential for market security. ABcripto has historically advocated for this practice and proposed enhancements to the requirements.
- Confidentiality Preservation and Information Security: Strengthening data protection standards is crucial to ensure that financial and personal information of clients and companies are safeguarded against unauthorized access and cyber threats.
- Clear Definition of Types of PSAVs: The regulatory proposal establishes distinct categories for different sector agents, such as liquidity providers, intermediaries, custodians, and brokers, ensuring appropriate rules for each operational model and avoiding disproportionate demands.
- National Market Competitiveness and Regulatory Balance: Standards need to be compatible with international best practices and regulatory equivalents to ensure that companies maintain sustainable development, preserving dynamics and innovation, reducing the possibility of regulatory arbitrage, without adding unnecessary controls that may compromise sector competitiveness and integration with international markets.
- Review of Regulatory Interconnection between Different Regulators: Clear delineation of regulators’ competencies is essential to avoid role overlaps and interdependencies that can lead to regulatory gaps, legal uncertainty, and delays, ensuring a more predictable and efficient business environment.
- Adequate deadline for regulatory compliance: A well-structured transition period allows PSAVs to make necessary adjustments without compromising their operations, ensuring progressive adaptation to new requirements.
Public Consultation 110/2024 – Authorization Processes for PSAV Operation:
- Efficient licensing process: Establishing an agile authorization flow proportional to the companies’ size promotes innovation in the sector.
- Governance and compliance: Aligning governance requirements with best practices in the financial market is essential to ensure transparency, operational solidity, and efficient accountability mechanisms.
- Structured regulatory transition: Regulations must be implemented gradually, allowing PSAVs to adjust their internal processes and operational structure without negative impacts on the market and investors.
- Flexibility for companies of different sizes: Regulations should consider the size and complexity of PSAVs’ operations, ensuring that regulatory requirements are proportional to their operational scale.
Public Consultation 111/2024 – Foreign Exchange Rules for Virtual Assets:
- Differentiation between foreign exchange operations and transactions with virtual assets: Stablecoins and other digital assets have unique characteristics that need to be considered to prevent automatic equivalence to traditional foreign exchange operations, preventing distortions in the sector.
- Avoiding barriers to the international market: Regulation should allow Brazilian companies to operate globally without restrictions that could compromise their competitiveness and innovation in the digital asset sector.
- Self-custody and prevention of money laundering: A balance between preventing illegal activities and the operational feasibility of PSAVs should be maintained, ensuring that self-custody remains in place and that controls for different types of anti-money laundering can be safely and efficiently incorporated.
- Clarification of the role of stablecoins: Differentiating between types of stablecoins and their respective functions in the market should be incorporated into regulation, avoiding generic restrictions that may limit their use.
- Adaptation to market dynamics: The regulatory model should consider the specificities of decentralization, technological innovation, and globalization of the sector, ensuring that the standards are suitable for the sector’s reality.
- National market competitiveness and integration with the global market: A review of obligations impacting the national market is essential to preserve market liquidity and ensure that regulation does not render established business models in the global crypto asset scenario unviable.
- Continued collaboration with the Central Bank: ABcripto reaffirms its commitment to work alongside the regulator to build a balanced, efficient regulatory framework focused on the sustainable growth of the cryptoeconomy in Brazil.
