Brazil Tightens Licensing Rules for Virtual Asset Service Providers

Brazil's central bank has implemented stricter licensing regulations for virtual asset service providers, effective June 1. According to ChainCatcher, these providers must now undergo independent financial audits before obtaining operational licenses. The audits will assess the companies' financial health and compliance with anti-money laundering and counter-terrorism financing regulations. This includes verifying the separation of company funds from client assets, risk management practices, and employee training. Auditors must be registered with the Brazilian Securities Commission. New applicants, such as crypto exchanges, brokerage firms, and custodial services, must comply with these requirements from the start of the registration process. Existing license holders will also need to pass independent audits for license renewals. In 2022, Brazil's legislation first placed virtual asset services under central bank regulation, establishing a licensed category for these providers by November 2025. Recently, Brazil banned 28 betting and prediction market platforms, including Polymarket and Kalshi, for not adhering to local derivatives trading requirements. Additionally, from October 1, Brazilian electronic foreign exchange providers are prohibited from using cryptocurrencies for international remittances.