Regulation of the cryptocurrency market is constantly becoming stricter. Nowadays jurisdictions impose high regulatory and risk management requirements on virtual asset service providers.
Despite this, we always manage to find a solution that suits the client. All the time our team provides research of the market and regulations on various markets to find the best jurisdiction. Recently we have made the global overview of the VASP regulation in the Latam Countries and are ready to share information with our future and existing clients. Today we will look at the features of obtaining a cryptocurrency license in Brazil.
The law regulating the activities of VASPs
1. Law No. 14.478/2022 (Cryptoassets Act)
2. Decreto nº 11.563/2023
VASP regulator
the Central Bank of Brazil (“BCB”)
Activities included in VASP services
Art. 5 Virtual asset service providers are legal entities that perform, on behalf of third parties, at least one of the virtual asset services, understood as:
I – exchange between virtual assets and national currency or foreign currency;
II – exchange between one or more virtual assets;
III – transfer of virtual assets;
IV – custody or administration of virtual assets or instruments that enable control over virtual assets; or
V – participation in financial services and provision of services related to the offer by an issuer or sale of virtual assets.
VASP registration procedure for a local company
For now, all VASPs can operate without a specific licence, unless they are required to have a licence because their activities fall under traditional banking, payments or securities regulation.
The rules, that will outline the details on how to obtain a licence and all other information concerning VASPs licensing procedure, are currently being studied and drafted, and will be published in the coming months. The BCB must provide at least six months for existing service providers to comply with any new requirement.
The prospective VASPs will be required to implement:
(i) the anti-money laundering and terrorist financing Policy;
(ii) governance structure;
(iii) transaction record structure;
(iv) internal risk assessment;
(v) structure for monitoring suspicious operations and reporting to the Financial Activities Control Board (COAF);
(vi) KYC (Know Your Client), KYP (Know Your Partner) and KYE (Know Your Employee) procedures; and
(vii) effectiveness evaluation.
Authorization of VASP from another state to provide services in the jurisdiction
No information
Requirements to the VASP after registration (corporate maintenance, reporting, substance)
The rules that will determine this are currently being developed.
Liability provided for the activities of a VASP without local registration
Fraud using virtual assets, securities or financial assets: Organising, managing, offering or distributing portfolios or intermediating operations involving virtual assets, securities or any financial assets with the aim of obtaining an illicit advantage, to the detriment of others, by misleading or keeping someone in error, using artifice, trickery or any other fraudulent means – will result in imprisonment, from 4 to 8 years, and a fine.”
Manimama Law Firm provides a gateway for the companies operating as the virtual asset wallet and exchange providers allowing to enter to the markets legally. We are ready to offer an appropriate support in obtaining a license with lower founding and operating costs. We offer KYC/AML launch, support in risk assessment, legal services, legal opinions, advice on general data protection provisions, contracts and all necessary legal and business tools to start business of virtual asset service provider.
The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.
