Brazil’s Finance Minister Fernando Haddad said the country is preparing regulatory reforms to attack the use of cryptocurrencies to finance organized crime. The review includes stricter rules on the use of cryptocurrencies and a revamp of the CVM, Brazil’s equivalent of the SEC.
Brazil aims to tighten regulations on cryptocurrencies to combat financing of organized crime
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The Brazilian government is planning an overhaul of its compliance system to control the use of cryptocurrencies for illicit purposes by criminal organizations.
The push is part of Finance Minister Fernando Haddad’s new strategy, which targets the financial sector of organized crime in addition to traditional measures such as territorial control.
CNN Brazil reported that new regulatory standards will be announced soon to address the use of this cryptocurrency by criminal organizations. Haddad said the CVM will strive for “more transparency about the individuals behind these assets and clearer rules regarding their tax treatment.”
The Brazilian government is also revamping the CVM, creating an organization to fight organized crime with taxes at the forefront.
The government’s goal is to expand the organization throughout Brazil and establish 10 police stations across the country to fight financial crimes. Nevertheless, implementation was delayed due to the repeal of Interim Measure 1,303, which changed the current virtual currency income tax rules.
Why is it relevant?
The new focus on cryptocurrencies as a factor funding organized crime could be troubling for Brazil’s crypto holders, given new compliance rules for national exchanges.
This could also result in tighter controls and restrictions on the movement of certain assets if new rules flag them as risky, encouraging Brazilians to move their assets to platforms with looser controls.
I’m looking forward to it
While controlling the use of cryptocurrency flows to fund organized crime groups is paramount, local analysts say it needs to be controlled without stifling innovation, impacting local crypto platforms, or impacting the wider adoption of these technologies.
FAQ
- What is the Brazilian government’s new strategy regarding cryptocurrencies?
The government plans to overhaul its compliance system to prevent the use of cryptocurrencies by criminal organizations as part of Finance Minister Fernando Haddad’s efforts. - What regulatory changes are expected regarding virtual currencies in Brazil?
New regulatory standards will be introduced to increase transparency regarding crypto-asset holders and clarify tax rules related to cryptocurrencies. - How does the Brazilian government plan to fight organized crime financially?
An organization will be established to deal with financial crimes, and 10 police stations nationwide will be established to target organized crime. - What concerns should Brazilian crypto holders have about these changes?
New compliance rules on domestic exchanges could lead to increased controls and encourage users to move assets to less regulated platforms.
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