Central Bank of Brazil Sets Timeline to Regulate VASPs and Stablecoins by 2024
The Central Bank of Brazil has unveiled its roadmap for regulating virtual assets service providers (VASPs) and stablecoins in the country, with plans to complete the process by 2024. The bank aims to engage with market participants to gather input on VASPs, establish guidelines for regulating stablecoins, and finalize rules for admitting VASPs into the Brazilian market later this year.
The central bank’s plan consists of three phases. The first phase involves conducting a public consultation to define the general standards that VASPs must adhere to in order to operate in Brazil. This follows a previous consultation held in December, which sought feedback from cryptocurrency stakeholders on asset segregation, risk management, activities, and virtual assets traded by VASPs.
In the second phase, the central bank will internally strategize the processes required to regulate stablecoins, focusing on areas such as payments and foreign exchange. Stablecoins, which are cryptocurrencies pegged to the value of another asset, have gained significant popularity in Brazil, surpassing traditional crypto assets like Bitcoin.
The third and final phase will see the central bank finalize the rules for admitting VASPs into the Brazilian market. The bank was granted the authority to approve VASPs’ operations in the country through a cryptocurrency law signed by former Brazilian President Jair Bolsonaro in December 2022.
The central bank aims to regulate the operation of these assets to prevent any potential harm to the national financial system. This includes implementing measures to combat money laundering and the financing of terrorism (AML/CFT), as well as monitoring suspicious activities carried out by these service providers.
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