The rise of cryptocurrencies in Brazil prompts the central bank to tighten regulation ScrgruppEn

The governor of Banco Central do Brasil, Brazil’s central bank, said the bank has noticed a significant rise in cryptocurrency adoption in the country and intends to respond by tightening regulation of digital assets.

During that letter In a report submitted to the parliamentary Finance and Taxation Committee on September 27, Roberto Campos Neto reported a rise in “imports of cryptocurrencies” by Brazilians. According to central bank data, cryptocurrency imports rose by 44.2% in the period from January to August 2023 compared to 2022. The total funds amounted to about 35.9 billion Brazilian reais ($7.4 billion).

Related: Brazilian lawmakers are seeking to add cryptocurrencies to the list of protected assets for debtors

Campos Neto separately stressed the popularity of stablecoins, which, according to him, are used more for payments than investments. He said the bank will respond to these trends by tightening regulation and bringing cryptocurrency platforms under its supervision. He added that issues related to cryptocurrencies could include tax evasion or illegal activities:

“We realize that many are linked to tax evasion or linked to illegal activities.”

Brazil handed over the primary role in regulating cryptocurrencies to the central bank in June 2023. However, token projects that qualify as securities still fall under the jurisdiction of the Comissão de Valores Mobiliários, or CVM — Brazil’s equivalent of the US Securities and Exchange Commission. Commission (SEC).

Brazil’s central bank is also working on its own digital currency, Drex. In August, it unveiled the central bank digital currency (CBDC) branding and logo. In a previous controversy, Brazilian blockchain developer Pedro Magalhaes was reported to have discovered functionality in Drex’s code that would allow a central authority to freeze funds or reduce balances.