The crypto asset market in Brazil will enter a new phase once the transition period for the rules set by Brazil's central bank, the Banco Central do Brasil, comes to an end. Speaking during a livestream hosted by Anbima, Nagel Paulino, a division head at the central bank, said the sector will operate solely with institutions authorised by the regulator, in a move aimed at providing greater legal certainty, protecting customers and reducing loopholes for firms operating without supervision.
According to Paulino, the regulation is built on the principle of integration between the provision of virtual asset services and the traditional financial system. For that reason, the central bank devoted a significant part of the new rules to governance, internal controls and risk management, with the aim of ensuring stability and the proper functioning of the regulated virtual asset market.
The most direct statement came when he addressed the end of the so-called transition period. "The market will belong only to authorised firms," Paulino said. He also stated that institutions already operating under regulation will bear responsibility for monitoring the market and avoiding relationships with firms attempting to operate without authorisation from the central bank.
In practice, the message is that crypto regulation does not end once a firm applies for authorisation. The central bank expects exchanges, custodians and other virtual asset service providers to enter the regulatory perimeter and follow a broader set of rules, similar to those already applied to financial and payment institutions.
Paulino said the goal is not to restrict activities with merit, but to bring within the scope of regulation those that relate to the financial system. According to him, the central bank's logic is to apply the principle of "same risk, same rule" — that is, to look at the nature of the risk generated by an activity, rather than the technology used or the legal form of the company.
Crypto licence does not authorise credit offerings
One of the most sensitive points raised by Paulino concerned the relationship between crypto assets and credit. According to him, a company authorised as a virtual asset service provider is not automatically cleared to offer credit products to customers. That activity requires specific authorisation from the central bank and follows its own set of rules.
"The credit market is a heavily regulated market, one where you need specific licences," Paulino said. He noted that finance companies, banks and other specialised institutions follow "very robust" regulation and are properly supervised. As a result, when the virtual asset market starts to engage with credit, "the whole body of that regulation applies", and the specific licence must be included in the institution's authorisation.
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The remarks drew attention because some crypto firms have been expanding plans to offer more comprehensive financial products, including yield, credit, cards, accounts and services closer to those of traditional financial institutions. For the central bank, however, the use of new technology does not change the nature of the activity. If a service involves credit, it falls within the credit regulatory perimeter.
Paulino left open the possibility of future developments. According to him, "this new market" could, over time, "eventually evolve in a few years to operate with credit", but that still depends on regulatory change and "a great deal of discussion" to assess whether the activities fit together appropriately.
The assessment was also highlighted in reports published after the livestream. Exame summarised the remarks by noting that the crypto market may evolve to operate with credit, but that this is not currently permitted without the corresponding licence. BitNotícias, meanwhile, pointed out that authorisation as a virtual asset service provider (PSAV) does not, by itself, authorise the offering of credit, which still depends on specific authorisation from the central bank.
Central bank targets customer protection and unfair competition
Another central point was user protection. Paulino said the virtual assets law itself introduced a specific obligation to protect clients and users, considered the most vulnerable party in the relationship because of limited financial literacy in Brazil.
For the central bank, this matters because the crypto market attracts considerable interest and involves technological and financial risks that are not always well understood by investors. Paulino cited the need for greater caution in customer onboarding, fraud identification and monitoring of practices that could harm the market.
The central bank representative also said the regulation seeks to address market distortions, such as unfair competition and unlawful practices. The concern is to prevent companies based abroad or outside the regulated perimeter from operating in Brazil under more favourable conditions than those required of authorised participants.
"We are seeking fairness and balance in the market," Paulino said. According to him, the regulation aims to create a level playing field for all operators and to reduce regulatory arbitrage, including in cases of companies that attempt to mimic the activities of virtual asset service providers without authorisation.
This point connects to one of the sector's main concerns: the activity of foreign players or liquidity structures based outside Brazil. Paulino acknowledged that liquidity providers are currently one of the most complex issues in the regulation. According to him, the central bank's initial interpretation is that there is no clear authority to directly regulate entities operating on their own account, but the rule sought to assign responsibilities to authorised providers in their dealings with such agents.
Stablecoins, self-custody and the 24-hour rule
The panel also addressed topics that generated friction during the regulatory process, such as stablecoins, self-custody and the 24-hour retention rule for certain transactions. Paulino recalled that the debate over stablecoins mobilised the market and even the Brazilian Congress, with bills attempting to invalidate part of the regulation under discussion. In his view, part of the reaction took place during the public consultation, precisely the moment when criticism and suggestions could be used to reassess the text.
Later, he acknowledged that a "specific regulatory framework" for stablecoins is still lacking, which could resolve some of the issues currently facing the central bank. Until that happens, the regulator must deal with the effects of these assets within the current rules.
On the 24-hour retention rule, Paulino said that for institutions with rigorous compliance and adequate risk management, the measure works as an additional safeguard and gives firms grounds to apply extra caution in certain transactions.
The central bank representative also signalled that the regulatory process will continue to evolve. According to him, future rules may address issues such as intermediation, custody and new activities specific to virtual asset service providers. Paulino said the regulator already has studies under way on these points and is expected to resume dialogue with the market.
In the end, the message was that crypto regulation in Brazil has entered a more permanent stage. After the adaptation phase, the market is expected to operate with authorised participants, greater vigilance over relationships with unregulated firms, and clearer limits on which activities each licence permits. For the sector, this means more predictability, but also more requirements to operate in an environment increasingly close to the traditional financial system.
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