Central Bank of Brazil outlines its regulatory and supervisory role for virtual assets and service providers

The Central Bank of Brazil published a recap of a LiveBC broadcast in which a senior official from its Department for Regulation of the Financial System explained how the bank has approached regulation and supervision of virtual assets, including key concepts used in Brazil’s legal framework and the role of virtual asset service providers (PSAVs). The recap directs readers to BCB Resolutions 519 and 520 as the basis of the regulatory framework for this market. The briefing distinguished cryptoassets as digital tokens traded on blockchain-based distributed ledger technology, relying on cryptography and consensus mechanisms to prevent double spending, from “virtual assets” as the term incorporated into Brazilian law by Law 14.478/2022. It described PSAVs as firms that intermediate and provide custody services for virtual assets, including transactions that exchange virtual assets for fiat currency and programmable transactions using smart contracts, and characterised stablecoins as tokens referenced to sovereign currencies (typically USD or EUR), noting the existence of BRL-referenced stablecoins traded in Brazil in lower volumes. On supervision, it linked Brazil’s regulatory approach to Financial Action Task Force recommendations on regulating PSAVs and reducing “pseudo-anonymity” in cryptoasset transactions, and stated that a presidential decree published in June 2023 assigned regulatory competence over virtual assets to the Central Bank while tokenised transactions structured under securitisation or collective investment contract rules under Law 14.430/2022 or Law 6.385/1976 fall within the remit of the Brazilian Securities and Exchange Commission (CVM).