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Brazil\u2019s central bank just tightened the screws on cryptocurrency trading with new regulations that could reshape how millions of Latin Americans use digital assets\u2014particularly stablecoins that have become a popular workaround for traditional banking systems.<\/p>\n
The long-awaited rules, announced<\/a> on Nov. 11, will extend existing anti-money laundering and terrorism financing regulations to virtual-asset service providers starting in February. For a country where crypto adoption has exploded in recent years, this is the most significant regulatory shift since Brazil approved its cryptocurrency legal framework in 2022.<\/p>\n Don’t Miss:<\/p>\n The timing isn’t coincidental. Brazilian Central Bank Governor Gabriel Galipolo has raised concerns about the growing use of stablecoins\u2014digital currencies pegged to real-world assets like the U.S. dollar\u2014that are often associated with illicit activity<\/p>\n \u201cNew rules will reduce the scope for scams, fraud, and the use of virtual asset markets for money laundering,\u201d central bank Director of Regulation Gilneu Vivan said at a press conference, Reuters reported<\/a>.<\/p>\n Here\u2019s what makes stablecoins particularly tricky from a regulatory standpoint: they\u2019re less volatile than cryptocurrencies<\/a> like Bitcoin, making them more useful for payments than investments. Many users have gravitated toward them specifically to bypass more heavily supervised and taxed traditional payment systems\u2014which is exactly what policymakers want to prevent.<\/p>\n Trending: Buffett’s Secret to Wealth? Private Real Estate\u2014Get Institutional Access Yourself<\/a><\/p>\n The updated regulations will treat stablecoin transactions similarly to traditional currency exchanges. Buying, selling or swapping virtual assets tied to government-issued currencies will fall under foreign exchange rules, according to Reuters. Cross-border payments using digital assets\u2014including card purchases and other electronic payment methods\u2014will receive the same regulatory treatment.<\/p>\n This isn\u2019t just semantic hairsplitting. By reclassifying these transactions as foreign exchange operations, Brazil\u2019s central bank is bringing them under the same regulatory umbrella as traditional currency exchanges\u2014complete with customer protection requirements, transparency standards, and compliance obligations.<\/p>\n The new framework will require virtual-asset service providers to meet standards around corporate oversight, security protocols, internal monitoring systems, and mandatory disclosures to regulators, according to Reuters. Authorization processes will now cover foreign-exchange and securities brokers, distributors, and virtual-asset service providers.<\/p>\n See Also: Wall Street’s $12B Real Estate Manager Is Opening Its Doors to Individual Investors \u2014 Without the Crowdfunding Middlemen<\/a><\/p>\n Brazil\u2019s moves matter beyond its borders. As Latin America\u2019s largest economy, regulatory decisions made in Brasilia often influence policy discussions throughout the region. The country held four public consultations before finalizing these rules, suggesting authorities were trying to strike a balance between innovation and oversight.<\/p>\n The central bank\u2019s statement emphasized that the framework includes customer protection requirements and transparency standards that previously didn\u2019t apply to virtual-asset service providers. For legitimate crypto users, these protections could actually increase confidence in the ecosystem by weeding out bad actors.<\/p>\n But for those who turned to stablecoins specifically to avoid traditional banking oversight, February marks the end of that regulatory arbitrage. The new rules are a clear signal that Brazilian authorities view unregulated crypto activity as a systemic risk worth addressing\u2014even if it means slowing down an industry that has seen explosive growth.<\/p>\n The question now is whether other Latin American countries follow Brazil\u2019s lead in closing what has become a significant regulatory gap in the global financial system.<\/p>\n Read Next: $100k+ in investable assets? Match with a fiduciary advisor for free to learn how you can maximize your retirement and save on taxes<\/a> \u2013 no cost, no obligation.<\/p>\n Image: Shutterstock<\/p>\n This article Brazil Just Closed A Major Crypto Loophole\u2014And Stablecoin Users Should Pay Attention<\/a> originally appeared on Benzinga.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Brazil\u2019s…\n","protected":false},"author":2,"featured_media":160094,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[11270,96376,1083,114,16754,22926,85,46,16632,96377,9180,96378],"class_list":{"0":"post-160093","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-anti-money-laundering","9":"tag-banking-systems","10":"tag-brazil","11":"tag-business","12":"tag-central-bank","13":"tag-digital-assets","14":"tag-il","15":"tag-israel","16":"tag-latin-america","17":"tag-regulatory-standpoint","18":"tag-service-providers","19":"tag-traditional-payment-systems"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/160093","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=160093"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/160093\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/160094"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=160093"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=160093"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=160093"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}