The governor of Banco Central do Brasil, Brazil’s central bank, recently highlighted the significant increase in crypto adoption in the country. In response to this surge, the bank intends to tighten digital assets regulation to address potential issues such as tax evasion and illicit activities.
During his speech to the parliamentary Finance and Taxation Commission on September 27, Roberto Campos Neto revealed that “cryptocurrency imports” by Brazilians had risen by 44.2% from January to August 2023 compared to the previous year. The total value of these imports amounted to approximately 35.9 billion Brazilian reals ($7.4 billion), according to data from the central bank.
Neto also emphasized the growing popularity of stablecoins, noting that they are being utilized more for payments rather than investments. As a response to these emerging trends, the central bank aims to tighten regulations and exercise supervision over crypto platforms. The governor acknowledged that the problems associated with crypto, such as tax evasion and illicit activities, need to be addressed:
“We understand that a lot is connected to tax evasion or linked to illicit activities.”
Brazil has granted the central bank a primary role in crypto regulation since June 2023. However, token projects classified as securities fall under the purview of the Comissão de Valores Mobiliários, the Brazilian equivalent of the United States Securities and Exchange Commission.
In addition to regulating cryptocurrencies, the Banco Central do Brasil is also developing its own digital currency called Drex. In August, the bank unveiled the brand and logo for its central bank digital currency. However, it faced controversy when a Brazilian blockchain developer reportedly discovered functions within the Drex code that would allow a central authority to freeze funds or reduce balances.
The decision to tighten regulation in Brazil reflects the growing recognition of the need for oversight in the crypto space. As cryptocurrencies gain mainstream adoption, governments and financial institutions around the world are seeking to ensure the integrity and stability of these digital assets. By implementing stricter regulations, Brazil aims to address potential risks and promote responsible use of cryptocurrencies within its borders.
