Until very recently, cryptocurrencies were not specifically regulated in Brazil, unless they met the definition of a security under the Brazilian Securities Law.
In December 2022 the President of Brazil sanctioned Law 14,478 setting the rules for virtual assets service providers (‘virtual assets service providers’ or VASPs). Law 14,478 came into effect in June 2023.
Law 14,478 defines virtual assets as the digital representation of value that can be negotiated or transferred by electronic means and used to make payments or for investment purposes.
It is important to emphasize that Law 14,478 excluded from the concept of virtual assets securities that remain under the competence of the CVM. Therefore, everything that involves assets that could potentially be characterized as securities must observe CVM’s rules.
Further, on June 20th 2023, the Executive Branch issued Decree 11,563 establishing that the Brazilian Central Bank is the authority responsible to supervise, authorise and regulate virtual assets service providers.
Brazilian Central Bank anticipated that the regulation is being centered by the recommendations of the International Monetary Fund (IMF), the Financial Stability Board and the Financial Action Task Force (ATF/GAFI).
Recently, on October 31st, 2023, Brazilian Central Bank has informed that it will launch in November 2023 public consultation to regulate the services provided by exchanges (VASPs) with emphasis on stable coins which ordinance will be valid for the third quarter of 2024.