Brazil’s central bank has warned that close to one-third of the 120 companies seeking to continue operating as virtual asset service providers may fail the country’s new licensing review because they do not meet mandatory capital thresholds.
The warning comes just after the Oct. 30 deadline for existing firms to file for authorization. Officials also indicated that many applications were incomplete, including missing audited financial statements required under the new rules, raising the prospect of a smaller field of approved crypto businesses in the country.
Regulator flags weak applications
According to central bank officials, about 30% of the firms that applied submitted filings with deficiencies serious enough to jeopardize approval. If those problems are not resolved during the review, the companies could see their requests rejected and lose the ability to keep operating under Brazil’s new framework for virtual asset service providers.
The central bank has published a list of 120 entities that filed before the deadline. The latest comments suggest that filing on time did not necessarily mean an applicant met the substantive requirements needed to remain in the market.
Capital rules can reach $7.2 million
The concerns center in part on new minimum capital standards set under Resolutions 519 and 520. Depending on how a business is classified, the required share capital can be as high as $7.2 million, a threshold that appears to have caught out a notable share of applicants.
Central bank official Aquino also said that many applicants failed to provide audited financial statements, another document demanded by regulation. The combination of insufficient capital and incomplete financial disclosure has intensified uncertainty over how many current operators will ultimately secure authorization.
Potential impact on the local market
The stricter regime is already being linked to changes in Brazil’s crypto industry. Earlier reports cited the departure of several firms from the market, including Bitnuvem, NovaDAX, Digitra, and Coinext, as businesses adjusted to the new requirements.
The possibility that a sizable number of applicants may be turned away has raised concern about reduced access for both institutions and retail users seeking digital asset services in Brazil. João Paulo Oliveira, founder of NoxPay, said on social media that, based on the tone of the central bank’s remarks, he believes as many as half of the 120 applicants could be rejected in the first round. That estimate is his own assessment, not a formal regulatory figure.
Why some firms may have filed anyway
Analysts and market participants have suggested that some companies may have submitted applications despite expecting rejection, in part to gain time. Since Nov. 6, banks have been barred from serving institutions that did not file applications, creating a strong incentive for firms to submit something before the cutoff.
For companies that did not apply, the wind-down deadline is Nov. 30. The central bank has also said that new entrants can still apply to enter the Brazilian market, but future requests may take up to two years to review, and applicants will not be allowed to operate while waiting for approval.
Source: news.bitcoin.com