Crypto regulations in Brazil: What the Central Bank is planning
In 2024, Brazil recorded $6.9 billion in cryptocurrency transactions from January to May, making up 53% of Latin America’s market share. Stablecoins make up 90% of these transactions. With surging crypto adoption rates, Brazil has become a major force in the global crypto market. The Central Bank of Brazil (BCB) is now stepping in to bring clarity and control to this rapidly expanding space.
This article explores Brazil’s emerging crypto regulations, the BCB’s plans, current challenges, impacts on traders and the industry and what lies ahead.
Key Takeaways:
Brazil is setting the pace for crypto regulation in Latin America with its comprehensive legal framework and Central Bank–led oversight, including strict rules for VASPs and stablecoins that aim to protect investors and curb illicit activity
New regulations offer clarity and investor protection, but come at a cost, as increased compliance burdens could crush smaller players and push innovation toward less-regulated markets.
Brazil’s forward-looking approach signals a strong push to modernize its financial system, positioning the country as a potential global model for balanced crypto regulation.
What are crypto regulations?
Crypto regulations are legal frameworks governing the use, trading and issuance of cryptocurrencies to ensure market integrity, protect investors and prevent illicit activities. These rules, established by governments or regulatory bodies, outline licensing for virtual asset service providers (VASPs), anti-money laundering (AML) and know your customer (KYC) requirements and the legal status of digital assets.
Brazil’s current stance on crypto
Brazil’s position on digital assets is comprehensively captured in its first crypto assets framework, Law No. 14,478/22 or the Brazilian Virtual Assets Law (BVAL). BVAL was passed by the Brazilian National Congress on Dec 21, 2022, and took effect from Jun 20, 2023. This legislation defines virtual assets as digital representations of value that can be traded, invested or used as payment, explicitly excluding traditional financial assets. It designates the Brazilian Central Bank (BCB) as the primary regulator, tasking it with authorizing and supervising VASPs, such as crypto exchanges and wallet providers.
Before this law, cryptocurrencies were regulated under the Brazilian Civil Code as general assets, creating ambiguity in taxation, AML compliance and investor protection. The BCB’s Normative Instruction No. 1,888/2019 required crypto exchanges to report transactions, but lacked a comprehensive framework. Law No. 14,478/22 addresses these gaps by establishing legal certainty, mandating VASP licensing and aligning with Financial Action Task Force (FATF) standards. The BCB has since initiated public consultations in order to refine rules on asset segregation, cybersecurity and operational transparency. Public consultations ended in February 2025, and the final draft of the regulation is expected to be published soon.
Brazil’s new regulatory framework
In 2025, Brazil introduced particularly strict regulations targeting stablecoins, which constitute about 70% of the country’s crypto transactions. The BCB has implemented some key rules to enhance security and transparency, including limiting stablecoin transfers to self-custody wallets and imposing restrictions on transactions involving foreign currency–denominated stablecoins.
These measures are designed to reduce fraud, money laundering and tax evasion risks by tightening know your customer (KYC) requirements and increasing monitoring of cross-border flows. However, these rules have drawn criticism from industry players such as Coinbase, which warns of potential stifling of innovation and migration to unregulated platforms.
The BCB is advancing a phased regulatory approach, with detailed proposals expected later in the year. Brazil’s framework draws inspiration from global models such as the European Union’s Markets in Crypto-Assets Regulation (MiCAR), but tailors rules to local needs like integrating crypto with systems like Pix, Brazil’s instant payment platform.
Brazil’s move toward regulatory clarity puts it ahead of other Latin American countries, such as Argentina, which lag behind. However, the BCB faces challenges in balancing stringent oversight with pushing innovation, as overly restrictive rules could drive crypto businesses to less-regulated jurisdictions.
What are the regulatory issues with cryptocurrency in Brazil?
Prior to Law No. 14,478/22, Brazil’s unregulated crypto market faced the following significant challenges that slowed its growth and stability.
Legal uncertainty: Without specific legislation, cryptocurrencies operated in a gray area — especially regarding taxation. The Brazilian Federal Revenue Service required crypto gains to be declared for income tax but lacked specific guidelines, leading to compliance confusion. Taxpayers could be penalized for misreporting due to ambiguous rules.
Illicit activities: Lack of oversight made crypto markets vulnerable to money laundering, tax evasion and fraud. In July 2021, Brazilian authorities seized R$172 million ($33 million) in a money-laundering investigation involving crypto exchanges.
Market volatility and investor risk: Unregulated exchanges and initial coin offerings (ICOs) exposed investors to scams and market manipulation. The absence of consumer protection mechanisms deterred mainstream adoption, while high-profile Ponzi schemes eroded trust.
Operational risks: VASPs operated without standardized cybersecurity or asset segregation protocols, risking user funds in cases of hacks or insolvency. A scenario similar to the FTX collapse, in which poor management and lack of proper safeguards resulted in massive losses, would expose thousands of users to financial harm.
How Brazil’s Crypto regulations compare globally
Brazil’s developing framework for crypto regulation is one of the most comprehensive in Latin America, ranking the country as a potential leader in digital asset governance. Compared to countries like Argentina, which still lack a centralized regulatory framework, Brazil’s Law No. 14,478/22 and the Central Bank’s active role offer significantly more legal clarity and institutional oversight. This structured approach has allowed Brazil to address key issues — such as VASP licensing, AML compliance and asset segregation — earlier than many of its regional peers.
Globally, Brazil’s model takes some inspiration from established frameworks, such as MiCA and local innovations. For instance, while MiCA lays out uniform rules across the EU for stablecoins, Brazil has implemented tailored measures that limit foreign-currency stablecoin usage and emphasize integration with domestic tools like Pix. This localized adaptation helps ensure regulations are relevant to Brazil’s unique financial infrastructure and consumer behavior.
Nevertheless, Brazil's strict controls, especially around stablecoins, have drawn criticism for potentially stifling innovation, a concern echoed in other jurisdictions like the US and India. In contrast, jurisdictions such as Switzerland and Singapore have maintained innovation-friendly environments by offering regulatory sandboxes and clearer guidance without imposing sweeping transaction bans.
As Brazil fine-tunes its approach, its challenge will be to maintain a competitive edge while safeguarding its growing crypto economy. The country’s ability to attract global players and retain domestic innovation will depend largely upon how flexibly it adapts its rules in the face of rapid technological change.
Why this matters for crypto traders and the industry
A sound crypto regulatory regime in Brazil will help stabilize the Brazilian crypto market and protect investors.
Investor protection: Regulations mandate AML/KYC protocols for VASPs, reducing fraud and scam risks. For example, licensed exchanges must verify user identities and report suspicious transactions, creating a safer trading environment. This builds confidence, particularly for retail investors wary of crypto’s volatility.
Compliance requirements: VASPs face increased operational costs in order to meet licensing, cybersecurity and reporting standards. While this ensures legitimacy, smaller firms may struggle, potentially consolidating the market around larger players like Binance or Mercado Bitcoin.
Market stability and maturity: A clear regulatory framework reduces uncertainty, attracting institutional investors and nurturing growth. Brazil’s crypto trading volume reached $12 billion in September 2024, and regulations are expected to drive further growth by integrating crypto with mainstream finance, such as through Pix or Drex, Brazil’s central bank digital currency (CBDC).
Innovation and financial inclusion: Regulations enable VASPs to develop new products, such as tokenized assets or crypto-backed loans, enhancing financial access in Brazil’s underserved regions. For instance, fintechs have leveraged crypto to offer microfinance solutions, reaching more unbanked individuals in 2024.
Global competitiveness: Aligning with FATF standards positions Brazil as a credible player in the global crypto market that’s able to attract foreign investment. However, traders and businesses must navigate compliance costs, which could impact profitability.
The future of Brazil crypto regulation
Brazil is set to implement significant reforms in its cryptocurrency regulatory framework, reflecting the country's growing engagement with digital assets. In 2025, the BCB plans to regulate stablecoins and asset tokenization, recognizing the increasing demand for these digital assets. Former Central Bank chief Roberto Campos Neto previously voiced concerns over potential tax evasion and illicit activities linked to stablecoins, which account for approximately 90% of crypto transactions in Brazil. The regulatory framework aims to address these challenges while ensuring a balanced and secure environment for the country’s digital asset ecosystem.
As part of its broader regulatory agenda for 2025 and 2026, the BCB has outlined priorities that include the evolution of Open Finance, virtual asset regulations and expansion of the functionalities of Pix, Brazil’s real-time payment system. This comprehensive plan also includes measures for improving sustainability, increasing transparency in rural credit and modernizing payment schemes. These initiatives will help modernize Brazil's financial landscape, making the nation a leading hub for innovative financial technologies.
Simultaneously, Brazil's tax authority, Receita Federal (RF), is preparing to overhaul cryptocurrency tax laws, with reforms expected to begin in the first quarter of 2025. One key component of the reform is the introduction of a dedicated tax declaration form called DeCripto that aims to insure crypto traders submit annual tax declarations. This move is intended to enhance tax compliance and reduce the risk of tax evasion, providing clear guidelines for cryptocurrency taxation.
Further reforms
In line with its efforts to integrate digital assets into its financial system, Brazil is also advancing new measures, such as a bill introduced in March 2025 that allows employees to receive partial salary payments in Bitcoin. This development represents a significant step toward integrating cryptocurrencies into everyday financial transactions.
The BCB is also progressing with the creation of Drex, a digital version of the Brazilian real that’s designed to improve transaction efficiency and security.
These collective efforts underline Brazil's commitment to fostering a regulated, innovative environment for cryptocurrency adoption and its integration into the broader financial system.
The bottom line
Brazil’s crypto regulation is moving toward greater clarity, investor protection and market maturity. For traders, the new framework will offer enhanced security and a more trustworthy environment, especially through stricter KYC/AML protocols and clearer tax obligations. However, increased compliance costs and tighter restrictions may challenge innovation and drive some activity to unregulated platforms. Striking the right balance will be crucial.
If Brazil can maintain regulatory rigor while fostering innovation, it stands to become a regional leader in digital finance. The next phase of implementation will determine whether Brazil becomes a blueprint for emerging market regulation or a cautionary tale of regulatory overreach.
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