In December 2022, Brazil enacted Federal Law n. 14.478 (“Virtual Assets Law”) which provides general guidelines for the cryptoassets market. This regulatory framework formally recognized  the provision of services involving cryptoassets,  defined the entities authorized to operate in the virtual asset market, and introduced criminal and consumer liability provisions.

Cryptoassets represent one of the most dynamic frontiers of technological innovation. As these markets grow and expand, regulatory frameworks have historically struggled to evolve at the same pace, creating the need for a more detailed and comprehensive approach from regulators. Considering this scenario, the Central Bank of Brazil (“BCB”), which is the competent authority under the Virtual Assets Law, issued three new resolutions to provide further detail and guidance to the market.

This article aims to present an overview of how these new resolutions regulate the authorization process, the legal incorporation and operation of Virtual Asset Service Providers (“PSAVs”), as well as their activities and operations in the foreign exchange market, with particular emphasis on anti-money laundering and counter-terrorism financing (“AML/CFT”) requirements.

Legal overview of BCB’s resolutions

BCB has issued three resolutions designed to structure and detail the operation of cryptoassets in Brazil. Resolution n°. 519, establishes the procedures for the authorization of foreign exchange brokerage firms, securities brokerage firms and securities distributors, as well as companies providing virtual asset service. It also sets forth the minimum requirements for their incorporation, operation, and governance structure.

A central AML-related feature of Resolution BCB N. 519 is the requirement for minimum capital and net equity thresholds. These structural conditions facilitate supervisory oversight, mitigate insolvency risks, and prevent the use of undercapitalized entities as channels for money laundering or terrorism financing.

It is also requires the adoption of a corporate governance structure compatible with the complexity and risk profile of the business, and the managers must have an unblemished reputation and technical competence suitable to their role. It includes a prohibition on investment funds acting as controlling shareholders that reflects a risk-based approach intended to prevent structures that hinder the proper identification of the ultimate beneficial owner.

Resolution BCB N. 520, expands AML/CFT requirements by regulating the governance, corporate structure, and operational modalities of PSAVs, including intermediaries, custodians, and brokers. In this regard, it provides for a mandatory establishment in Brazil, prohibition of sole-partner structures, and defines that the Governance Policy must be approved by the Board of Directors or the Executive Board and, in the absence of these, by the administrator. These measures reinforces accountability at senior management level and contributes to enhanced oversight.

The resolution also requires the nomination of at least one Executive or administrator responsible for AML/CFT compliance, internal controls, and risk management; aligning these institutions with international best practices for accountable governance in high-risk sectors. Required governance policies encompass fraud and crime prevention mechanisms, business continuity, and detailed procedures for monitoring atypical transactions.

A key AML safeguard highlighted by the resolution is the mandatory segregation of client assets and the general prohibition on the proprietary use of client-held virtual assets, which reduces commingling risks and facilitates forensic financial analysis.

Outsourcing arrangements must also be subject to robust AML/CFT scrutiny: institutions must evaluate technical and regulatory capacity of service providers, adopt joint AML controls, and ensure full compliance with regulatory standards. These measures seek to mitigate third-party risks, a critical vulnerability within the virtual asset ecosystem.

Resolution BCB N. 521 extends AML/CFT protections to the foreign exchange environment by incorporating virtual asset operations into Brazil’s exchange regulatory framework. There is a USD 100,000 limit on transactions with non-authorized counterparties – a threshold halved for traditional intermediaries that serves as a risk mitigation and reduces exposure to unsupervised entities commonly associated with illicit finance.

By requiring the declaration of virtual assets transferred abroad or received from other jurisdictions, the resolution aligns virtual asset operations with the AML/CFT obligations applicable to cross-border capital movements.

The resolutions enter into force on February 2, 2026, except for Resolution BCB N. 521, whose provisions concerning special operations, foreign capital in Brazil, and minimum information reporting obligations will take effect on May 2026.

Conclusion

In summary, the new resolutions significantly elevate the governance, transparency and accountability standards for PSAVs. They impose strict requirements related to authorization, internal controls, capital, asset segregation, foreign exchange compliance, and transparency.

According to the BCB, PSAVs have until October 30, 2026, to comply with the new resolutions. After this date, any authorized institution will be prohibited from operating with counterparties that are not authorized, or at least undergoing the authorization process, to operate as PSAVs, except when expressly permitted by regulation.

Achieving full compliance with these rules will require procedural adjustments, internal restructuring, policy updates, and readiness for continuous reporting and monitoring routines. Given the complexity of the obligations involved, it is expected that market participants will increasingly rely on specialized external counsels’ support to implement policies, structural governance adjustments, regulatory oversight, and reassess their operational practices.

The new regulatory framework reflects the BCB’s determination to ensure that one of the most dynamic frontiers of technological innovation evolves within a robust governance and AML/CFT architecture capable of preserving market integrity, financial stability, and regulatory confidence.