Brazil is taking another step toward regulating the rapidly growing cryptocurrency market. The Brazilian Senate has announced plans to hold a public hearing on cryptocurrency regulation, signaling the country’s commitment to updating its laws. The hearing will focus on an important private member’s bill introduced by Senator Soraya Thronicke of the Podemos Party, which aims to regulate virtual assets services providers (VASPs). The bill proposes measures to address the fast-evolving digital economy and ensure greater transparency and protection for Brazilian crypto users.
Senators Call for Consultation with Experts and Industry Representatives
The public hearing, set to take place soon, will be hosted by the Senate’s Economic Affairs Committee. The hearing follows a call from Senator Rogerio Carvalho, the leader of the Partido dos Trabalhadores (PT) party, for a thorough consultation before advancing any legislation. Carvalho emphasized that Brazil’s crypto market has been growing at an accelerated rate and, as such, a detailed review of the proposed regulations is essential.
Carvalho, a supporter of President Lula’s government, underscored the need for a “technical, in-depth analysis” to ensure the new regulations would protect consumers and investors. He argued that a robust legal framework for cryptocurrency would bring much-needed legal certainty and transparency to the growing digital asset sector.
The Senate has invited four organizations to participate in the hearing, including two regulatory bodies, the Central Bank of Brazil (BCB) and the Securities and Exchange Commission (CVM). Two industry groups, the Brazilian Association of Cryptoeconomics (ABCripto) and the Brazilian Financial and Capital Markets Association (Anbima), will also be asked to provide their input.
The Scope of the Proposed Cryptocurrency Regulation
Senator Thronicke’s bill addresses various aspects of the cryptocurrency industry, including how digital assets are issued, held, and settled. The proposed law mandates that all cryptocurrency exchanges and brokerages operating in Brazil, including foreign-based platforms serving Brazilian residents, must apply for operating licenses. Thronicke’s goal is to ensure that exchanges keep customer and company funds separate, thereby increasing transparency and reducing the risk of fraud.
This new bill follows Thronicke’s previous attempts to introduce similar regulations in 2020, 2022, and 2024. Her latest proposal seeks to place further control over VASPs, effectively holding them accountable to the authorities and providing more oversight in the space. Thronicke has clarified that her primary aim is to bring more clarity and security to the sector. If passed, the bill could significantly alter how cryptocurrency exchanges and brokerages operate within the country.
New Requirements for Exchanges and Financial Institutions
One of the most discussed provisions of Thronicke’s bill is a rule that would force cryptocurrency exchanges in Brazil, including foreign platforms, to register with the National Register of Legal Entities (CNPJ). This step is part of a broader effort to integrate cryptocurrency operations into Brazil’s traditional financial regulations. The new measure would bring Brazil’s crypto sector closer in line with global standards for financial markets and improve the oversight of businesses operating in the industry.
In addition to the registration requirement, the bill includes a provision to segregate customer funds from those held by the exchange. This rule aims to protect customer funds and prevent the mixing of client assets with company resources. It also addresses concerns raised in the past about fraudulent activities and mismanagement by crypto exchanges. By enforcing this separation, the bill seeks to ensure greater accountability within the industry.
Brazil’s Growing Cryptocurrency Adoption and Challenges
Brazil’s crypto adoption rate has been on the rise in recent years. According to recent data, the country now ranks sixth in the world for crypto adoption, with approximately 12% of its population owning digital assets. A study by the exchange Bitso showed that the number of crypto exchange customers in Brazil rose by 6% recently, reflecting the growing interest in cryptocurrencies among the Brazilian public.
However, the country has also seen its share of challenges. An increasing number of fraud cases and regulatory challenges have accompanied the rapid expansion of the cryptocurrency market. These issues have heightened concerns among lawmakers and regulators, leading to calls for stronger regulation and consumer protection. In response, the Senate has recognized the need for new regulations to address these concerns and safeguard the interests of users and investors.
Stronger Oversight for Foreign Crypto Platforms
Another significant feature of Thronicke’s bill is that it requires foreign crypto platforms that serve Brazilian residents to comply with the country’s regulatory framework. This provision ensures that overseas exchanges are subject to the same rules as domestic platforms.
By holding foreign exchanges to the same standards, the bill aims to prevent evasion of Brazilian laws and ensure that Brazilian users are protected regardless of where the platform is based.
The integration of foreign exchanges into the Brazilian regulatory system is expected to enhance the overall safety of the crypto market. By requiring them to register with Brazilian authorities, the government can better monitor their activities and ensure compliance with national standards. This would also help reduce the risks posed by unregulated offshore platforms that often operate with little oversight.
Brazil’s Regulatory Progress and Global Position
Brazil has already established a foundation for cryptocurrency regulation with the passage of Law No. 14.478/2022. This law laid the groundwork for oversight of the crypto market in Brazil but lawmakers believe further updates are needed to address the rapid growth of the industry and the evolving landscape of digital assets. The country’s approach to cryptocurrency regulation aims to balance innovation with consumer protection, a challenging but necessary task as the sector matures.
In addition to the proposed bill, Brazil is also considering a new initiative that would allow employees to receive part of their salary in Bitcoin or other cryptocurrencies. This bill, introduced by Federal Deputy Luiz Philippe de Orleans e Bragança, aims to create a more formal framework for crypto payments in the labor market. Under the proposed law, workers would be able to receive up to 50% of their salary in digital assets, with the remaining portion paid in the country’s official currency, the Brazilian real.
If passed, the proposed regulations could serve as a model for other countries seeking to regulate the cryptocurrency sector. As the public hearing approaches, lawmakers and industry leaders will continue to discuss the most effective ways to regulate the crypto space. The outcome of these discussions will likely have a lasting impact on the direction of Brazil’s digital economy and its standing as a global leader in cryptocurrency adoption.
