The Brazilian Association of Cryptoeconomics (ABcripto) submitted its contributions on February 28th to Public Consultations 109/2024, 110/2024, and 111/2024 of the Central Bank of Brazil (Bacen), which establish the foundations for the regulation of virtual asset service providers (VASPs). The entity evaluates the proposals positively but suggests adjustments to strengthen legal certainty, ensure investor protection, and preserve Brazil's competitiveness in the global scenario.
For Bernardo Srur, CEO of ABcripto, sector regulation needs to balance innovation and consumer protection without imposing excessive restrictions on companies. "Regulatory advancement is essential to provide predictability to the market 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 conducting an open and technical dialogue, and we remain committed to contributing to a modern and efficient regulatory framework," says Srur. The contributions of ABcripto were developed collaboratively by its members, led by the Central Bank Working Group and the Taxation, Exchange, and Stablecoins Working Group, and include suggestions to improve the regulation of the sector.
The full contributions are available atABcripto website
Check out ABcripto's main contributions to the Central Bank
Public Consultation 109/2024 – Regulation of PSAVs
- Asset segregation and risk management:Ensuring the separation between PSAV assets and client assets is essential for market security. A ABcripto historically defends the practice and has proposed improvements to the requirements.
- Preservation of confidentiality and information security:The strengthening of data protection regulations is essential to ensure that clients' and companies' financial and personal information are safeguarded against unauthorized access and cyber threats.
- Clear definition of PSAV types:The regulatory proposal establishes distinct categories for the different agents in the sector, such as liquidity providers, intermediaries, custodians, and brokers, ensuring appropriate rules for each operating model and avoiding disproportionate requirements.
- National market competitiveness and regulatory balance:The standards must be compatible with international best practices and regulatory equivalents to ensure that companies maintain their sustainable development, preserving dynamics and innovation, reducing the possibility of regulatory arbitration, without adding unnecessary controls that could compromise the sector's competitiveness and integration with international markets.
- Review of regulatory interconnection between different regulators:A clear delineation of the regulators' competencies is essential to avoid role overlaps and interdependence effects that may lead to regulatory gaps, legal uncertainty, and delays, ensuring a more predictable and efficient business environment.
- Adequate timeframe for regulatory compliance:A well-structured transition period allows PSAVs to make necessary adjustments without compromising their operations, ensuring gradual adaptation to the new requirements.
Public Consultation 110/2024 – Authorization Processes for the Operation of PSAVs
- Efficient licensing process:The creation of a swift authorization process proportional to the size of the companies 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:Regulation 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:Regulation should take into account the size and complexity of PSAVs' operations, ensuring that regulatory requirements are proportional to their scale of activity.
Public Consultation 111/2024 – Exchange Rules for Virtual Assets
- Differentiation between foreign exchange transactions and transactions with virtual assets:Stablecoins and other digital assets have their own characteristics that need to be considered to prevent them from being automatically equated with traditional foreign exchange operations, thereby avoiding distortions in the sector.
- Avoid barriers to the international market:The regulation should allow Brazilian companies to operate globally without restrictions that could compromise their competitiveness and innovation in the digital assets sector.
- Self-custody and prevention of money laundering:A balance between preventing illicit activities and the operational viability of PSAVs must be maintained, ensuring that self-custody remains in place and that controls for different types of illicit activity prevention can be incorporated safely and efficiently.
- Clarification of the role of stablecoins:The differentiation between types of stablecoins and their respective functions in the market should be incorporated into regulation, avoiding generic restrictions that could limit their use.
- Adaptation to market dynamics:The regulatory model must take into account the specifics of decentralization, technological innovation, and the globalization of the sector, ensuring that the regulations are appropriate to the sector's reality.
- Competitiveness of the national market and integration with the global market:The review of obligations that impact the national market is essential to preserve market liquidity and ensure that regulations do not make existing business models in the global cryptoasset landscape unviable.
- Continuous collaboration with the Central Bank:ABcripto reinforces its commitment to working alongside the regulator to build a balanced, efficient regulatory framework focused on the sustainable growth of the cryptoeconomy in Brazil.
