The president of Brazil has signed government decree No. 11.563, establishing rules under a December 2022 law on a legal framework for crypto in Brazil. The legislation authorises the Central Bank of Brazil to regulate and supervise virtual asset service providers and ensures many token projects that qualify as securities will continue to fall under the purview of the Comissão de Valores Mobiliários, or CVM — Brazil’s equivalent of the US Securities and Exchange Commission.
The CVM was aiming to create a regulatory framework better attuned to the volume of crypto trades in the country as well as emerging markets. According to the notice, the decree will go into effect on 20 June 2023 without impacting certain laws on consumer protection and financial crimes, Cointelegraph reported.
The decree came amid expectations that Brazil’s central bank would begin a pilot project for a central bank digital currency, or CBDC, in collaboration with major payments firms, including Visa and Mastercard. The bank will test the privacy and programmability functionalities of its platform for the potential rollout of a digital real.
Brazil, boasting a substantial market in South America, houses the crypto exchange Mercado Bitcoin and has granted licenses to foreign payment providers such as Crypto.com and Bitso. In March 2023, Coinbase, a cryptocurrency exchange based in the United States, revealed its collaboration with domestic companies to enable Brazilian residents to make crypto purchases.
Progress is being made in Brazil's initiative, known as the digital real project, aimed at developing a central bank digital currency. In this regard, Mercado Bitcoin, a cryptocurrency exchange based in the country, has undertaken several pilot tests to examine the integration of a tokenized form of the digital real.
Using the Stellar blockchain as a public blockchain, the tests went through all of the steps that a regular user would have to perform in order to use a tokenized, on-chain version of the digital real. These included Know Your Customer (KYC) and antifraud procedures procured from a digital decentralized identity system. The ID and fraud prevention processes were handled by Clearsale and CPQD, which ensured that the transactions would not conflict with Mercado Bitcoin’s transaction processing tool, Mercado Bitcoin Pay.
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