Brazil's Cryptocurrency Regulations: Combating Scams or Raising Concerns Over Surveillance?

Brazil Implements $7 Million Crypto Reserve Requirement and Foreign Exchange Restrictions

The Central Bank of Brazil has rolled out comprehensive new rules that bring the nation’s crypto industry under strict financial oversight, compelling companies to maintain capital reserves of up to $7 million and designating stablecoin dealings as foreign exchange transactions. These regulations, which take effect on February 2, 2026, are intended to fight money laundering, boost transparency, and more closely integrate digital assets with the mainstream financial sector, all while encouraging innovation and managing risks, according to a

.

The regulatory package, detailed in Resolutions 519, 520, and 521, requires virtual asset service providers (VASPs)—such as exchanges, custodians, and brokers—to secure a license from the Banco Central do Brasil (BCB) by November 2026 or halt their operations. The minimum capital thresholds depend on the type of business: exchanges and brokers must hold at least 37.2 million reais ($7 million), custodians need 18.6 million reais ($3.5 million), and other providers are required to have 10.8 million reais ($2 million), as outlined in a

. These reserves must be maintained as both paid-in capital and net equity, with strict compliance to anti-money laundering (AML) and counter-terrorism financing (CTF) standards, as highlighted in the same .

A major aspect of the new rules is the reclassification of stablecoin transactions as foreign exchange (FX) activities, subjecting them to the same regulations as traditional international money transfers or currency exchanges. As a result, buying, selling, or moving fiat-backed stablecoins like and will now require documentation similar to FX filings, and transactions with unlicensed parties will be limited to $100,000 each, according to a . The BCB has also broadened AML and transparency requirements to include transfers involving self-custody wallets, obliging providers to verify wallet ownership and trace asset sources, as reported by a .

The central bank stressed that these initiatives are meant to "curb scams, fraud, and the misuse of virtual asset markets for money laundering," said regulation director Gilneu Vivan, as referenced in the

. With Brazil’s crypto sector processing close to $319 billion in transactions between mid-2024 and mid-2025—about one-third of the region’s total—the new rules are designed to bring the industry in line with international norms and address risks associated with stablecoins, which make up 90% of Brazil’s crypto activity, according to a .

Responses from the crypto community have been divided. While authorities point to improved consumer safeguards and greater legal clarity, opponents argue the measures amount to "total surveillance," potentially undermining privacy and stifling innovation, as noted in a

. Brazilian analyst Felipe Demartini observed that the new system creates a centralized registry of crypto users, raising alarms about data privacy and government overreach. On the other hand, supporters believe Brazil is establishing itself as a regulatory pioneer in Latin America, building on its 2022 digital asset legislation and the success of its instant payment platform PIX, which influenced aspects of the new framework, as mentioned in a .

The transition period, which gives companies until May 2026 to update their reporting processes, allows major players like Mercado

and Foxbit to enhance their compliance systems. However, smaller operators may face difficulties, possibly resulting in industry consolidation, as discussed in a . Analysts suggest the BCB’s gradual approach is intended to minimize disruption while filtering out less robust firms.

As Brazil works to formalize its crypto landscape, these regulations also pave the way for the forthcoming digital real (Drex) central bank digital currency, which seeks to emulate the efficiency and openness of cryptocurrencies, as reported by a

. By treating stablecoin payments as FX transactions and enforcing capital requirements, Brazil is signaling its commitment to balancing innovation with regulatory oversight—a strategy that could serve as a model for other developing markets.