Central Bank of Brazil is appointed regulator of virtual asset service providers

Decree No. 11,563 was published today, regulating Law No. 14,478/2022, known as the Brazilian Cryptoassets’ Legal Framework, meeting the market's expectations by designating the Central Bank of Brazil (Bacen) as the regulator of virtual assets in the country. This measure represents a breakthrough in the search for a safe environment for investors and other participants in the crypto-asset market.

The executive act establishes the powers of the entity to regulate the operation and supervision of virtual assets service providers. Its attributions include: (i) authorize the operation, transfer of control, merger, spin-off and incorporation of the virtual assets service provider; (ii) establish conditions for the exercise of positions in statutory and contractual bodies in virtual assets service provider and authorize the tenure and exercise of persons for management positions; (iii) apply the provisions of Law No. 13,506/2017 in case of non-compliance with the Legal Framework or its regulations; and (iv) cancel, ex officio or upon request, the authorizations granted by the Central Bank.

In addition, the regulator must manifest itself on the conditions under which the following activities will be included in the foreign exchange market or will be subject to the regulation of Brazilian capital abroad and foreign capital in the country: (i) exchange between virtual assets and national currency or foreign currency; (ii) exchange between one or more virtual assets; (iii) transfer of virtual assets; (iv) custody or administration of virtual assets or of instruments that enable control over virtual assets; and (v) participation in financial services and provision of services related to the offer by an issuer or sale of virtual assets.

It should be noted that Decree 11.563/2023 reinforced the understanding of the Legal Framework that the virtual assets that have characteristics of assets representing securities will be under the scrutiny of the Brazilian Securities Commission (CVM), as already emphasized by the federal autarchy through the Opinion of Guidance No. 40.

Finally, both the mentioned executive act and Law 14,478/2022 will come into force on June 20, 2023, when the players in the cryptoasset market will anxiously await the Central Bank's moves to define the guidelines for the sector.

Our team is at your disposal for further clarifications, as well as to assist with crypto-related questions.

Gustavo Flausino Coelho - gustavo@bastilhocoelho.com.br

Fernando Naegele - fernando@bastilhocoelho.com.br

Shayenne Buarque de Freitas - shayenne@bastilhocoelho.com.br

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