Published today, June 14th, Presidential Decree 11,563/23 attributes to the Central Bank of Brazil (BACEN) the jurisdiction to regulate, authorize and supervise the provision of virtual asset activities.

Effective on June 20th, 2023, the Decree will allow BACEN to rule, among other issues, on authorization rules for the functioning and operation of virtual asset service providers.

The Decree does not apply to assets representing securities and safeguards the jurisdiction of the Brazilian Securities and Exchange Commission (CVM) concerning these assets.

With the publication of the Decree, Brazil is making progress in institutionalizing the crypto-asset sector.

It is expected that the BACEN will present for public consultation a set of norms to regulate the activities and operation of virtual asset service providers, including topics such as authorization for operation and minimum capital stock, performance limits, and the intersection with the players of the traditional financial system.

In a note published on the CVM website, the agency clarifies that the operating authorization for virtual asset service providers to be granted by BACEN, under Law 14,478/22, does not cover activities with securities digitally represented in the form of tokens.

The CVM also reinforces that secondary operations involving tokens characterized as securities must be carried out by management entities of organized markets authorized by CVM. Any use of the operating authorization to be obtained before BACEN following Law 14,478/22, Decree 11,563/23 and further regulations to be issued by BACEN will not be allowed.

Finally, CVM emphasizes that it will invest efforts to develop new rules for the constitution and administration of organized securities markets, including tokens, considering the results obtained with the experiences of the regulatory Sandbox.