Brazil’s Central Bank Says 30% of VASPs Fail to Meet Capital Requirements
Brazil’s virtual asset service provider market is facing a shake-up after the deadline for exchanges to submit the requirements needed to become licensed and continue operating expired on Oct. 30.
The central bank disclosed a list of 120 entities that applied. Bank officials said nearly one-third of those companies submitted flawed applications, which might affect their ability to continue operating.
Livecoins reported that Ailton Aquino, the Central Bank of Brazil’s inspection director, recently discussed the issue in a conference keynote. Aquino said at least 30% of cryptocurrency exchanges lacked the share capital required to comply with the regulator’s resolution, affecting the viability of their operations.
Aquino was referring to the bank’s new capital requirements, which stipulate that each institution must hold up to $7.2 million in capital, depending on its classification, under Resolutions 519 and 520.
Earlier reports indicate that these measures have already prompted numerous companies to leave the Brazilian market, including Bitnuvem, NovaDAX, Digitra, and Coinext.
Aquino also emphasized that many firms that submitted applications did not include audited financial statements, as required by regulation.
Aquino’s remarks raised concerns across the cryptocurrency ecosystem, as this could reduce the options available to Brazilian institutions and customers seeking access to digital asset financial markets.
João Paulo Oliveira, founder of NoxPay, a crypto-enabled payment service provider, estimated that many of these institutions might be rejected by the central bank despite having submitted applications.
“Judging by the tone of his talk, I think half of the 120 VASPs on the list are going to get rejected in this first round,” he said on social media.
Some have suggested that institutions may have applied despite expecting rejection, in order to buy time and avoid being blocked by banks. Since Nov. 6, banks have been prohibited from providing services to institutions that did not submit applications. Companies that did not apply have until Nov. 30 to wind down their operations.
Companies can apply to enter the Brazilian market, but the central bank has set a review period of up to two years. During that time, an exchange cannot operate until its application is approved.
