Brazil's Central Bank Opens Public Consultations to Regulate Virtual Asset Providers: What CP 109 and CP 110 Propose

Brasília, November 12, 2024 — The Central Bank of Brazil (BCB) published two public consultations on Friday, November 8, outlining for the first time in regulatory text how companies that sell, hold or intermediate crypto assets will have to operate in the country. It is the step that was missing after Law 14,478/2022 created the sector's legal framework and the government chose the BCB as regulator. Until now, these companies have operated without a specific license.

Public consultations opened on 11/8/2024 (CP 109 and CP 110)

2

Proposed categories: intermediary, custodian and broker

3

Proposed minimum capital, depending on the category

R$1 to 3 mn

Deadline for submitting comments

2/7/2025

How we got to the consultations

Law 14,478/2022, signed on December 21, 2022, defined what a virtual asset is and created the crime of fraud involving these assets, but left the regulation of service providers to an agency the Executive branch would designate. Decree 11,563/2023, from June 2023, assigned that role to the Central Bank.

The draft arrives almost two years after the law. In the meantime, the market has continued without capital requirements, asset segregation or prior authorization. The separation between client money and the company's own cash is precisely the point the draft seeks to address.

What CP 109 proposes: provider types, capital and obligations

CP 109 creates a new category of institution, the virtual asset service provider company, and divides it into three categories according to activity. The draft also lists the fees these companies will be allowed to charge. According to Valor Econômico, the proposed minimum capital and net worth limits range from R$1 million to R$3 million, with an extra R$2 million for higher-risk activities such as margin accounts and staking.

Besides capital, the draft covers governance and general and category-specific obligations. The provider must segregate its own assets from its clients' assets, a rule that had been left out of the final text of the legal framework for lack of consensus. The proposal also provides that intermediaries and brokers offer payment accounts to hold clients' money in reais, and that banks and securities brokers may act as intermediaries and custodians.

The draft also includes a definition of stablecoin: a virtual asset created to keep a stable value. The treatment of these coins in the foreign exchange market, however, is not in the two consultations. The BCB said it will release, by the end of 2024, a specific proposal on how providers will be able to operate in the foreign exchange market.

What CP 110 proposes: the path to authorization

CP 110 regulates the authorization processes for provider companies and, because the activities are similar, groups them with those of foreign exchange brokers and of securities brokers and dealers. As with institutions the BCB already regulates, the provider needs prior BCB authorization to operate. The required documents and review deadlines are left to specific rules, which the BCB will release later.

As the law requires, the draft gives different treatment to companies already in business. The company applies for authorization and may keep operating while the application is examined, but it may not expand its list of services during the transition. The review would have two phases:

1. Proof of activity: evidence that the company was already providing virtual asset services before the rule and that it has the minimum capital and net worth.
2. Compliance review: examination of compliance with the other rules, especially on infrastructure, organization, controls and management.

After filing the application, the company would have six months to make the remaining adjustments. The deadline for applying for the license and the date the rule takes effect have not yet been set. Companies that have not started operating by the effective date will need authorization before they begin.

To ensure a legally secure environment and guarantee the soundness, efficiency and regular functioning of virtual asset service provider companies.

Central Bank of Brazil, 11/8/2024 note, on the purposes of the proposals

Deadlines and next steps

1. 12/21/2022Law 14,478, the legal framework for virtual assets, is signed.
2. 06/13/2023Decree 11,563 designates the Central Bank as regulator of providers.
3. 11/08/2024The BCB opens public consultations 109 and 110 on the Participa + Brasil portal.
4. 02/07/2025Deadline for comments.
5. No dateSeparate proposal on providers' activity in the foreign exchange market, which the BCB expected by the end of 2024. After that, publication of the final rules.

Comments are submitted through the Participa + Brasil portal. The BCB has not said when it will publish the final resolutions. Because the text under consultation may change, figures such as minimum capital should be read as a proposal, not as a requirement in force.

What this means for companies and customers

Nothing changes today: the draft is not a rule. But it points the way. Anyone who buys or holds crypto assets through a Brazilian platform should, at the end of the process, have an authorized counterparty with minimum capital, separate assets and officers identified to the BCB.

For consumers, segregation is the most concrete point. Today, if a platform goes bankrupt, what happens to clients' assets depends on the contract and on how the company held them. The draft seeks to standardize that protection. More context on the sector's topics is in the blog's Regulation category.

• Central Bank
• Regulation
• Stablecoins
• Foreign exchange
• Compliance
• Exchanges
• Markets