Brazil will begin to apply VASP regulations by 2026

Authorities at the Brazilian Central Bank said the aim is to begin enacting VASP regulations in 2026, in accordance with the definition of the regulations that these regulations follow. The bank emphasized that rules allow freedom, but should not be “too bold.”

Brazil’s Central Bank aims to complete VASP regulations by 2026

Brazil, one of Latin America’s largest economies, is preparing to implement regulations on virtual asset service providers (VASPs) by 2026. Local reports show that central bank authorities are currently finalizing the rules that these institutions should follow to operate in Brazil.

Nagel Paulino, part of the central bank’s financial system regulatory division, emphasized that the agency is “stricken by all sides of pressure for regulation, particularly from the prosecutor’s office, the federal police and the central bank’s own board of directors.”

Regulations for the cryptocurrency sector were enacted in 2022 and were required by the VASP to obtain approval from the central bank to operate, but these rules are not applied because of central bank moratoriums.

Paulino said these rules have already been addressed and in a balanced approach that benefits both regulators and market actors. He emphasized that the current focus is “for freedom, but not too bold, and not creating a safe and preventative framework.”

Furthermore, he pointed out that future rules will not create asymmetry between the international regulatory framework and the Brazilian market. If this occurs, the cryptographic characteristics lead to risk of mass movement to other markets.

“It’s not difficult to move to a country with no regulations,” Paulino praised.

In conclusion, Paulino believes that Brazil will become the country that sets the trend when it comes to regulating Ratum crypto assets. “We all follow guidance from international entities. This interaction is important,” he concluded, highlighting the need for international coordination in the legislation process.

In 2024, Paulino himself argued that these rules could be finalized by 2025, linking the delay to the particularity of the local VASP ecosystem.

Read more: Brazil’s Central Bank aims to finalize crypto exchange regulations by early 2025