Nearly one-third of the 120 cryptocurrency exchanges that filed to continue operating in Brazil as VASPs fail to reach the share capital required to operate in compliance with Central Bank regulations, meaning they could have their applications rejected after review.
Key Takeaways
Central Bank of Brazil Warns That 30% of VASPs Fail to Comply With Capital Requirements
The virtual assets service provider market is facing a reconfiguration in Brazil, after the deadline for exchanges to file the requirements to become licensed and keep operating expired on Oct. 30.
While the central bank disclosed a list of 120 entities that applied, central bank officials reported that nearly one-third of these companies have submitted flawed applications that might affect their continued operation.
Livecoins reported that Ailton Aquino, the Central Bank of Brazil’s inspection director, commented on the issue recently while giving a keynote at a conference. Aquino said that at least 30% of cryptocurrency exchanges did not have the share capital to comply with the regulator’s resolution, affecting the viability of their operations.
Aquino refers to the new capital requirements issued by the bank that establish that each institution would have to hold up to $7.2 million in capital, depending on its classification, according to Resolutions 519 and 520.
Earlier reports indicate that these measures have already triggered the exit of numerous companies from the Brazilian market, including Bitnuvem, NovaDAX, Digitra, and Coinext.
Furthermore, Aquino also stressed that a large number of the firms that filed their applications did not include an audited financial statement, an element requested by regulation.
Aquino’s statements raised alarms in the cryptocurrency ecosystem, as this might bring a reduction in the options Brazilian institutions and customers have to access digital asset financial markets.
João Paulo Oliveira, founder of NoxPay, a crypto-enabled payment service provider, estimated that a good number of these institutions might be rejected by the central bank even after submitting their applications.
“Judging by the tone of his talk, I think half of the 120 VASPs on the list are going to get rejected in this first round,” he declared on social media.
Some have suggested that institutions might have applied knowing they would be rejected to buy time and avoid being blocked by banks, which, since Nov. 6, have been banned from providing services to institutions that did not submit applications. Furthermore, companies that did not apply have until Nov. 30 to wind down their operations.
While companies can file applications to enter the Brazilian market, going forward, the central bank has established a period of up to two years to consider these requests, during which time the exchange will not be able to operate until the application is approved.
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WRITTEN BYSergio Goschenko
