On Wednesday, September 27, Roberto Campos Neto, Brazil’s central bank governor, announced his intention to tighten crypto regulation. During his speech on Finance and Taxation at a Congress hearing, Campos Neto said virtual assets brokerages should be subject to strict supervision.
Given Brazil’s significant increase in crypto adoption, the governor emphasized the need to heighten scrutiny on crypto and related activities.
Crypto Adoption Increased By 44%
Brazil has witnessed increased adoption amid a high inflation rate. This could be because most people have resorted to digital assets to hedge against inflation and evade tax. Moreover, many believe demand has shifted from fiat currency to stablecoins–cryptocurrencies pegged to USD and other real-world assets.
Further, Brazil’s central bank reported earlier this week that crypto imports increased by 44.2% from January to August, reaching $7.4 billion. This figure was significantly higher than the value recorded over the same period last year.
Campos Neto noted that virtual currencies, especially stablecoins, have become increasingly popular for payment. According to him, Brazilians are now using cryptocurrencies as a means of payment instead of only as an investment.
Brazil To Heighten Crypto Regulatory Scrutiny Amid Surging Adoption
Furthermore, Campos Neto linked the growing adoption to people’s quest to evade taxes or perform illicit transactions. “We understand that a lot is connected to tax evasion or linked to illicit activities,” the governor noted. He said the central bank is fighting these criminal tendencies by toughening regulations and supervising crypto and related activities.
The Brazilian Congress has been progressive in its quest to establish clear guidelines for digital assets. In November 2022, Congress approved a bill to regulate the Brazilian market.
The bill includes resolutions, ideas, and guidelines for virtual assets service providers. It also nominated the Central Bank of Brazil and the country’s Securities and Exchange Commission (CVM) as the watchdogs. The bill finally took effect in June 2023 after several considerations.
Recall that in June 2023, the Brazilian government signed a decree authorizing the central bank to oversee crypto assets providers. The signed decree also aimed to establish a regulatory framework for digital assets trading.
However, although the central bank is the primary crypto regulator, virtual assets that qualify as securities remain under the CVM’s supervision.
Also, during his speech at the congress hearing, Campos Neto mentioned the digital currency, Drex. Notably, Drex will launch by the end of 2024 and will play a pivotal role in the Brazilian virtual assets industry.
However, the central bank of Brazil is still in the developmental stage of its digital currency (CBDC), tagged Drex. On August 7, the bank revealed the digital real logo and officially branded it Drex. According to the central bank, Drex is an acronym for Digital Real, electronic, and connection.