• Brazil’s President Lula recently signed a decree granting the country’s central bank supervision of its local cryptocurrency sector.
• The legislation will give the financial institution jurisdiction to determine which firms can operate in the local market.
• The Central Bank will also cooperate with Brazil’s Securities and Exchange Commission (CVM) to oversee coins deemed as securities.
Brazil Assigns Central Bank to Regulate Cryptocurrency Sector
The President of Brazil – Luiz Inácio Lula da Silva, simply known as Lula – has assigned the country’s central bank to supervise the local cryptocurrency sector. The official decree that was signed by him will come into effect on June 20 and will grant Banco Central do Brasil jurisdiction to determine which firms can operate in the local market.
Central Bank Responsibilities
The financial institution will be responsible for introducing a licensing system for crypto providers, where all participants must register. Additionally, it is expected to monitor if entities abide by anti-money laundering procedures and whether they are linked to any criminal activities, such as financing terrorism.
Cooperation with SEC
Brazil’s Securities and Exchange Commission (the Comissão de Valores Mobiliários, or CVM) will also play a role in the regulatory process. The agency and Banco Central do Brasil will jointly supervise cryptocurrencies labeled as securities within the local market.
Timeline
The changes proposed by President Lula are set to take effect on June 20th 2021. All firms offering digital asset services after this date must obtain permission from Banco Central do Brasil before operating in Brazil’s cryptocurrency sector.
Conclusion
By assigning responsibility for regulating Brazil’s cryptocurrency sector to its central bank, President Lula has taken an important step towards establishing clear guidelines for digital asset service providers operating within the country’s borders. This move is likely to encourage further institutional investments into blockchain technology projects within the region going forward.