The last few weeks have been replete with regulatory news in Brazil. After the enaction of the bill that regularised digital assets, which we explained here in January, Law 14, 286/21 came into force on 31 December 2022. This new law governs the Brazilian FX market, and it brings aspects about Brazilian capital held abroad, inward remittances, and the provision of information to the Brazilian Central Bank. Some Brazilian laws on FX operations are more than a century old and hence some aspects of these laws are outdated.
With the new law, the Brazilian Central Bank plans to bring the country in alignment with the recommendations of the Organization for Economic Co-operation and Development (OECD) and make international payments and receipts quicker, which will benefit both companies and individuals that need to send or receive funds from abroad. The new law also covers contemporary subjects by including aspects related to games, bets, and virtual assets (NFTs and cryptocurrencies).
The new law includes financial startups (fintechs) in our FX ecosystem. These can request authorisation to handle FX transactions of up to USD 100,000. However, the deadline for the same was postponed to July 2023.
The new rules set out four specific classifications for games, bets, and virtual assets, such as Bitcoin, Ethereum, and NFTs. It means that the Central Bank not only recognises the existence of FX related to payments in these markets but also provides specific classifications for them, which is a tremendous advance. Virtual assets used to be classified as ‘goods delivered abroad,’ according to the guidelines of the Central Bank itself. As for games and bets, there was no guideline on classifications. This formalisation now makes transactions with these markets clearer, creating a possibility for these segments to expand in Brazil.
The Central Bank will allow authorised institutions to decide how they will formalise the contracting of FX transactions, provided the basic requirements established in the legislation are met. This measure aims at aligning FX operations with other transactions in the financial system. And while the submission of documentary evidence used to be waived only for operations of up to USD 3,000, the institutions that operate FX transactions will now be responsible for deciding how to conduct these operations and which documents will be necessary in accordance with the risk policies adopted by them.
The legislation also brings good news, especially for those who travel abroad. The maximum amount in foreign currency that someone could carry without having to declare it has been increased from BRL 10,000 to USD 10,000. Also, it is now possible to sell money in a foreign currency to a friend or relative, which used to be restricted to banks and FX brokers. Now, individuals can transfer up to USD 500 in foreign currencies between themselves, provided it happens occasionally and not on a professional basis.
The Central Bank also established the equivalence of transactions on bank accounts in the local currency of non-residents with those of residents of Brazil.
During 2023, a series of other issues related to this FX legislation will be discussed, and among the points to be reviewed by the Central Bank is the classification of FX transactions of up to USD 50,000, with exceptions. The current 180 codes to identify the purpose of operations should be condensed into just 10, which is another way of simplifying FX transactions.
This framework of rules established by the Central Bank of Brazil makes the FX process clearer and less bureaucratic, while also adhering to the digital ecosystem, which did not exist when these rules were last updated. With this, Brazil makes its presence increasingly felt in the global economy, while expanding the potential for supply and the number of players operating in this segment, reducing fees for consumers, driving technological innovations, increasingly democratising access to financial services, and attracting international investments.
With over 10 years of experience with Global Payments and FX, Vinícius’s fields of expertise include innovation in digital banking and global payments, cross-border trade in Latin America, crypto, and blockchain technologies. At Bexs, his main challenge is leading commercial growth by applying innovation in financial technology to enable financial interaction between global markets and Latin America.
Bexs connects Brazil to the world with the best team and innovative FX and payment technologies to bridge the gap between companies and customers on every continent. The group unifies the solutions developed by Bexs Bank, which has been providing tailored transactions and API capabilities to the FX market for over 30 years, and Bexs Pay, a pioneering digital payment provider for cross-border markets. This ensures Brazilian customers have access to the best the world has to offer and gives Brazilian products and services cross-border reach. Bexs has already handled millions of payments and FX transactions for global companies including TikTok, Worldline, Kwai, Thunes, and Nubank, among others.
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