BRAZIL Trends and Developments Contributed by: Eduardo Castro, Pedro Nasi and Gabriel Libanori, Machado, Meyer, Sendacz e Opice
Machado, Meyer, Sendacz e Opice Rua José Gonçalves de Oliveira, nº 116, 5th floor
Itaim Bibi São Paulo Brazil Tel: +55 11 3150 7000
Email: bd@machadomeyer.com.br Web: www.machadomeyer.com.br/en
Brief Introduction to the Brazilian Financial System and Recent Regulatory Trends The Brazilian financial regulatory landscape has evolved rapidly over the last two decades, notably after the publication of certain key statutes such as: • Law No 12,865/13, which has defined the legal framework applicable to the provision of payment services in the country; • Law No 14,286/21, which has fully revamped the Brazilian foreign exchange market; and • Law No 14,478/22, which laid down the legal prin - ciples and main definitions pertaining to the crypto market. In parallel, the Central Bank of Brazil ( Banco Central do Brasil BCB) has consistently fostered the growth of the fintech ecosystem in Brazil through the promotion of advanced and innovative regulations, establishing financial thresholds to facilitate the entrance of new players in the market, creating new types of regulated institutions subject to a less stringent regulatory sys - tem, and implementing public consultations and open conversation with the regulated market. Among the most consequential regulatory actions of the BCB was the creation of Pix in 2020, one of the most successful instant payment schemes in the world. In addition, the launch of the Brazilian Open Finance system in 2018 has enhanced competition under the national financial system and allowed the development of new products, as well as the estab - lishment of the first Brazilian regulatory sandboxes in 2019. In turn, this has allowed the testing of new prod - ucts and measures aimed at advancing the regulatory
environment and strengthening the financial system. These developments have: • enabled the emergence and entry of new players into the Brazilian market, resulting in a signifi - cant reduction in market concentration within the national financial system; • increased competition; and • positioned Brazil as the leading fintech hub in Latin America. However, after nearly 15 years of innovation and growth, the Brazilian financial market began to face an increase in new and old challenges, including: • a rise in fraud within the Brazilian payment system; • the use of crypto exchanges (not fully regulated until 2026) to commit money laundering crimes; • cybersecurity incidents linked to social engineering carried out by the employees of financial institu - tions; • cyber-attacks; • the proliferation of other sophisticated criminal schemes targeting the financial system; and • recent events involving the potential insolvency of subacquirers and marketplaces in Brazil (not directly regulated by the BCB). These circumstances have prompted action from Brazilian authorities, including the BCB, which has responded mainly by broadening the regulatory perimeter, reformulating capital requirements and increasing the requirements applicable to banking- as-a-service (BaaS) structures.
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