Brazilian Crypto Trading Guidelines are Coming, Regulators Eye Transparency

It seemed like only yesterday when Brazil’s regulator stopped the local investment funds from buying cryptocurrencies. However, as time passed and cryptocurrencies became more “mainstream,” Brazilian authorities have begun to see crypto in a renewed light. And the latest development is that Brazilian Crypto Trading Guidelines are coming; the Brazilian regulations are set on making the entire ecosystem more transparent.

The regulator is working alongside Brazilian Economic Ministry, and CVM is under New Management

The Brazil regulator is working alongside the nation’s economic ministry after the country’s Securities and Exchange Commission, CVM, took a U-turn about its stance towards crypto and announced it wants to play a key part in the regulation of the crypto economy in Brazil.

It came shortly after the CVM was put under new management – leading the former chief to be happy who didn’t want the commission to be a part of it. Furthermore, the Members of the Brazilian Parliament have recently introduced more pro-business bills currently waiting for approval from the Brazilian government.

“Crypto Assets were One of the Key matters in the Meeting” – CVM

CVM announced in its official Twitter post that crypto assets were one of the key features that the governing bodies of the country are in the process of discussing. The goal now is to create new policies where crypto and fiat economies can work better together and have no issues.

Brazilian SEC has been Apprehensive About Overseeing Crypto Space in the past.  

The recent news coming out of Brazil is surprising, to say the least, since CVM has been historically against overseeing the crypto space. The major issue behind it is the nature of cryptocurrencies. The bill drawn earlier this year couldn’t consider tokens as securities or digital assets and, thus, not fall under SEC’s purview. However, a new board was soon appointed, and the goal was to make cryptos more relevant to the country’s financial services.

According to 2021 reports, over 7.8% of Brazilians own cryptocurrency. Between January and November last year, citizens traded $11.4 billion worth of Stablecoins, almost three times the amount traded back in 2020.

The USDT (Tether) is the favorite Stablecoin for Brazil, being acquired forth $9.7 billion in 2021. Other Stablecoins popular in the region are the DAI, TrueUSD, and USDC.

What are the views of Crypto Experts?

“Cryptocurrencies market should be regulated” – has been the main mantra of most crypto experts. The idea was always there, but these regulatory sentiments started echoing again after the crypto winter in the summer of 2022. The fall of Terra and the utter unaccountability of its founder, coupled with the plunge of Bitcoin, has been a big topic of discussion. Here are the five reasons why it is better to regulate the crypto market.

1. Preventing market manipulation and protecting investors: Crypto investors learned about the crypto market volatility the hard way. They didn’t only face enormous losses during the winter but also witnessed the shutdown of the top crypto lending companies such as Celsius and Voyager capital. What didn’t help is that the assets aren’t regulated. Yes, there are crypto taxes, but no measures yet exist to safeguard customer interest.
2. Only some cryptocurrencies must be allowed to be in the market: Over 100 new cryptocurrencies come up daily. Many YouTubers have demonstrated the “cut, copy, paste” approach it takes to generate your own crypto within a couple of hours. As such, many crypto assets in the market are worthless. There is a need to push only those crypto assets that show true potential for the ecosystem.
3. Cyber security risks are common within the crypto-sphere: The decentralized space is a double-edged sword. While it does set up a trustless ecosystem, it also remains vulnerable to hacks. Solana has been hacked a lot of times in the past. The recent Axie Infinity hack wiped out over 600 million from the ecosystem. Regulations can set up security centers that blockchain projects must abide by.
4. Money Laundering: Money laundering has been the biggest pain point when it comes to cryptocurrencies. Tornado Cash was banned due to that. Many believe that introducing regulations will introduce steps within this volatile market.

Conclusion

Brazil’s first step into regulating crypto is a move that we appreciate. Most crypto experts have been calling for more regulations for a long time, which is one of the many positive steps in this direction. Will other countries follow the same approach? We don’t know. But it would be nice to keep an eye on these developments for now.

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