BRAZIL Trends and Developments Contributed by: Thomas Gibello Gatti Magalhães, André Dágola Brostoline and Luisa Grespan Danhoni Neves, Magalhães & Zettel
Institutions authorised to operate by the Brazil - ian regulator, which have the necessary access - es and accounts to operate SPB and SPI, in addition to the necessary authorisations to pro - vide financial services, sell these accesses and authorisations to other non-financial companies, which can be called API (Application Program - ming Interface). So far, the regulator has fol - lowed this process and collected information and experiences, both positive and negative. By the end of 2024 it should issue a new regulation for BaaS, which will entail enormous transforma - tions for the financial sector, as all experiences currently in operation shall be adapted to the new regulation. This new BaaS regulation will bring greater secu - rity and transparency to the market by impos - ing strict protection and compliance criteria for financial services. This will result in an increase in trust between consumers and partners, and also encourage competition and innovation between banks and fintechs. As a result, there will be an expansion of access to financial ser - vices, boosting financial inclusion and contribut - ing to economic development. The Brazilian regulator seeks to stimulate the development of new activities, services, institu - tions and means of payment in a kind of sand - box, in which it observes, in principle, the devel - opment of a new market and, after positive and negative experiences, issues the regulations that will establish the rules of this new market, type of institution or provision of services. This is being done with BaaS and has been applied to Pay - ment Institutions. Crypto-economy in Brazil Parallel to this revolution in the Brazilian financial system, the world and, consequently, Brazil have seen the emergence, in recent years, of virtual
assets and cryptocurrencies as a new frontier in the financial market, resulting in a whole new ecosystem of service providers and market infra - structure necessary for the development and operation of transactions with virtual assets. Law No 14,478/2022 (“Legal Framework for Vir - tual Assets”) established the basis for the defi - nition and regulation of virtual assets in Brazil and defined BCB as the regulator responsible for crypto-assets and service providers involved in the crypto-economy, provided that they are not characterised as securities, in which case they would be the responsibility of CVM. The activities of crypto-economy service provid - ers regulated by BCB include: • exchange between virtual assets and national currency or foreign currency; • exchange between one or more virtual assets; • transfer of virtual assets; • custody or administration of virtual assets or instruments that enable control over virtual assets; and • participation in financial services and pro - vision of services related to the offer by an issuer or sale of virtual assets (Law No 14,478/22, Article 3). These service providers are commonly called Virtual Asset Service Providers (VASPs) and will have their activities linked to the obligation of prior approval by BCB, which will be responsible for the authorisations to operate and carry out corporate movements, authorisations to exer - cise positions and tenure in statutory bodies, supervision and control, as well as the regula - tion of activities in stricto sensu. Another important aspect of the Legal Frame - work for Virtual Assets is the possibility for finan -
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