Brazil’s president signs law aimed at having central bank regulate crypto firms

The decree authorizes the central bank to regulate and supervise virtual asset service providers, and ensures the country’s securities regulator will continue to handle many tokens.

Brazilian President Luiz Inácio Lula da Silva, known to many as simply Lula, has signed legislation giving clarity to the roles the country’s central bank and securities regulator will take in regards to cryptocurrencies.

In a June 14 notice, President Lula signed government decree No. 11.563, establishing rules under a December 2022 law on a legal framework for crypto in Brazil. The legislation authorizes the Central Bank of Brazil to regulate and supervise virtual asset service providers, and ensures many token projects that qualify as securities will continue to fall under the purview of the Comissão de Valores Mobiliários, or CVM — Brazil’s equivalent to the United States’ Securities and Exchange Commission.

Cointelegraph Brazil reported the CVM was aiming to create a regulatory framework better attuned to the volume of crypto trades in the country as well as emerging markets. According to the notice, the decree will go into effect on June 20 without impacting certain laws on consumer protection and financial crimes.

The decree came amid Brazil’s central bank expected to begin a pilot project for a central bank digital currency, or CBDC, in collaboration with major payments firms including Visa and Mastercard. The bank will test the privacy and programmability functionalities of its platform for the potential rollout of a digital real.

Related: Brazilian crypto exchange Mercado Bitcoin licensed as payment provider: Report

With one of the largest markets in South America, Brazil is home to crypto exchange Mercado Bitcoin and has licensed foreign payment providers including Crypto.com and Bitso. In March, U.S. crypto exchange Coinbase announced it had partnered with local firms to offer crypto purchases for Brazilian residents.

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