About 40 Crypto Firms Apply Before Brazil’s VASP Licensing Cutoff

Deadline reshapes the market

Brazil’s central bank opened a submission window for virtual asset service providers seeking authorization to continue operating under the new framework. After the cutoff, reports indicated that only about 40 firms had applied.

That total is far below the number previously expected and suggests that many businesses chose not to remain under the new regime. The result is a smaller field of providers, with the licensing process acting as a filter for which firms stay active in the market.

What happens to firms that did and did not apply

Companies that filed their applications are allowed to keep operating during the review process, giving them a path to remain in business while the regulator examines their submissions.

For firms that missed the deadline or decided not to apply, the timetable is much tighter. They have one month from October 30 to shut down their activities and withdraw from the Brazilian market in an orderly manner.

A further operational restriction begins on November 6, when banks and payment providers are set to stop facilitating transactions for VASPs that are outside the new regulatory framework. In practice, that means noncompliant firms will lose access to fiat payment rails.

Compliance costs appear to be a key factor

Brazilian crypto-law expert Tiago Severo said the low number of applications reflects the burden created by the new rules. He pointed to high capital requirements as well as the expense of complying with the reporting framework demanded by the central bank.

Severo also noted that major players including Binance and Itaú did submit applications. In his view, a market led by larger entities could mean customer assets are held by firms with bigger security budgets, which may strengthen security protocols.

Larger providers may become the sector’s backbone

Severo suggested the new structure could push larger approved firms into an infrastructure role for smaller businesses. Instead of building and operating their own exchanges, medium-sized banks, cooperatives, and retailers may end up offering crypto services through authorized providers.

The central bank has placed VASPs in its Type 3 classification, applying the same requirements used for brokerages and securities firms. That classification helps explain why the transition has been difficult for smaller operators and why the number of applicants fell so far short of expectations.

The next confirmed step is the review of the submitted applications, while the market adjusts to the November restrictions on banking access for firms outside the regime and the one-month wind-down period for those that did not file.