Brazil’s new crypto licensing regime has so far drawn only a small number of applications, according to a report by Valor Economico, underscoring how demanding the country’s new rules are for virtual asset service providers.
The report said five firms applied for authorization from the Central Bank of Brazil, but one application has already been denied. That leaves four still under review just weeks before the October 30 deadline for companies already operating in the country.
Few applicants under the new regime
The central bank’s crypto framework, which has now been approved and put into effect, is reshaping the Brazilian market. Valor Economico reported that only five virtual asset service providers sought formal authorization to continue operating under the new rules.
The companies involved were not identified. One applicant was rejected because it could not show that it had been operating in Brazil before February 2, when the new rules took effect, and because it did not satisfy the new minimum capital requirements.
Higher compliance burden narrows the field
The regulatory framework requires exchanges to submit ongoing reports, build compliance programs, and maintain capital that can reach as much as $7.2 million. Those obligations have already pushed part of the sector to leave the market before the October 30 filing cutoff.
Analysts cited in the report estimated that only about 10 VASPs, out of roughly 300 in the country, have the operational structure needed to meet the standards, including the capital threshold. The low number of applications so far reflects that consolidation pressure.
Some firms are exiting instead of applying
One recent example is Lemon, the Argentina-based exchange, which said on September 17 that it would wind down its Brazilian operations. The company said obtaining a license would force it to lock up a disproportionate amount of capital relative to the size of its business in that market.
The article described several exchanges as already ending operations or preparing to exit Brazil as they assess the cost of complying with the central bank’s requirements.
What happens next
Tatiana Guazzelli, a partner at Pinheiro Neto Advogados, said she expects the number of applications to rise in October as firms resolve outstanding questions and obtain further clarification from the central bank.
For now, exchanges that were already established in Brazil can continue operating while their applications are reviewed. Companies that apply only after October 30 may still seek authorization, but they would need to wait for approval before launching, and that process could take up to three years.
Industry associations are also seeking an extension of the deadline, arguing that firms need more time to implement the compliance and capital measures demanded by the new framework.
Source: news.bitcoin.com