Brazil authorizes its central bank to regulate cryptocurrency

Brazilian President Luiz Inácio Lula da Silva has approved a new law allowing the country’s central bank to regulate and monitor cryptocurrency enterprises while also ensuring that tokens that qualify as securities remain subject to the securities regulator’s jurisdiction. This action is consistent with Brazil’s aim to developing a regulatory framework for the country’s embryonic cryptocurrency industry.

Brazil’s central bank takes charge

Brazil’s Central Bank now has the right to control and monitor digital asset-focused enterprises such as bitcoin (BTC) trading venues, centralized crypto exchanges, and wallet providers, thanks to a new regulation signed by President Lula. This legislation attempts to protect consumers and reduce the dangers associated with digital assets. The decision also states that the Brazilian securities regulator, the Comisso de Valores Mobiliários (CVM), would continue to oversee token initiatives that are classed as securities. This regulatory approach recognizes the unique character of cryptocurrencies while allowing for innovation and protecting investors’ funds.

Brazil’s crypto and CBDC adoption

The new decree comes as Brazil prepares to launch its central bank digital currency (CBDC). Brazil’s central bank intends to test the functionality of its CBDC platform in collaboration with Visa and Mastercard.

This is consistent with a global trend of investigating digital currencies backed by central banks. Other countries in diverse jurisdictions, including Brazil, are now developing regulatory frameworks for digital assets. In Europe, for example, Ukraine has recently indicated its intention to implement the European Union’s newly established Markets in Crypto-assets (MiCA) rules. The framework intends to improve transparency, disclosure, and authorization for cryptocurrency issuance and trade.

On the other side, regulatory black clouds continue to loom over the web3 ecosystem in the United States, where SEC chief Gary Gensler has launched an assault on market players. Notably, lawmakers have sponsored the SEC Stabilisation Act, which would restructure the agency and remove Gensler as chairman. Significant changes in crypto legislation are expected in the next years. Investors, legislators, and regulators are anticipated to continue working together to develop rules that would enable a safer and more inclusive crypto economy.

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