Brazil’s Crypto Licensing Applications Fall Short Of Expectations

An assessment cited by Brazilian law firm Panucci, Severo e Nebias Advogados (PSNA) found that the number of institutions involved in the authorisation process was substantially below earlier industry forecasts of between 150 and 200 applicants. As of October 29, approximately 40 companies had been publicly identified through applications, regulatory notifications or related licensing activity.

The institutions included international cryptocurrency exchanges, domestic banks, payment technology companies and Brazilian stock exchange operator B3. However, smaller platforms have faced significant difficulties meeting the Central Bank of Brazil's new financial and operational requirements, prompting several businesses to withdraw from the market.

Compliance Costs Drive Smaller Platforms Out Of Brazil

Brazil's licensing framework introduces stricter requirements covering minimum capital, customer asset custody, financial auditing, anti-money laundering procedures and internal controls. Depending on their activities and risk profiles, cryptocurrency businesses face capital requirements ranging from R$10.8 million to R$37.2 million.

Tiago Severo Gomes, a partner responsible for cryptocurrency and virtual assets at PSNA, identified the broader costs of regulatory compliance as a significant obstacle for smaller operators. Beyond maintaining sufficient capital, businesses must demonstrate that they can support comprehensive reporting systems, audited financial statements and appropriate safeguards for customer assets.

These obligations have led some companies to conclude that operating under central bank supervision is no longer commercially viable. Argentine cryptocurrency platform Lemon announced its withdrawal from Brazil, citing the cost of maintaining its local operations, with approximately 15,000 customer accounts affected. The company has instead prioritised its activities in Argentina, Peru and Colombia.

Other cryptocurrency businesses, including Coinext, NovaDAX and Digitra.com, have also closed or scaled back their Brazilian retail operations. Earlier industry assessments suggested that only a limited number of applicants might ultimately secure authorisation, although the number of institutions identified ahead of the deadline exceeded some of the more conservative forecasts.

New Restrictions Take Effect In November

Under Brazil's regulatory framework, existing virtual asset service providers were required to seek authorisation from the central bank by October 30. Companies that failed to meet the deadline have 30 days to wind down their operations, while those that submitted applications can proceed through the regulatory assessment process.

The central bank will examine applicants' ownership structures, financial resources, business plans and operational safeguards before determining whether to grant approval. According to Gomes, applications from new market entrants could take up to two years to resolve.

Further restrictions are scheduled to take effect on November 6, when banks and payment institutions will generally be prohibited from conducting virtual asset transactions with providers that lack the necessary authorisation or regulatory exemption.

International exchanges have already adjusted their corporate structures in response. Binance submitted its application through BBrasil, a Brazilian entity established to manage cryptocurrency services separately from its local brokerage activities involving traditional currencies and payments.

Banks already supervised by the central bank are subject to a different procedure, allowing eligible cryptocurrency activities to be registered through regulatory notifications. On October 27, Itaú formalised its digital asset trading and custody services under the new framework, covering an offering that includes Bitcoin, Ethereum and USDC.

Stablecoins Dominate Brazil’s Cryptocurrency Transactions

Despite the relatively small number of licensing applicants, Brazil remains a substantial cryptocurrency market. Figures cited in the PSNA assessment show that Brazilian taxpayers reported R$505.5 billion in cryptocurrency transactions during 2025, an increase of 21.5% compared with the previous year.

Dollar-pegged stablecoins accounted for approximately two-thirds of the reported transaction volume, reflecting their growing role in international transfers, payments and other financial activities.

Major financial institutions have continued expanding their digital asset offerings, with Itaú, Bradesco, Santander, Banco do Brasil and Nubank among the banks providing cryptocurrency-related services. Nubank has offered customers access to 28 cryptocurrencies, while Itaú's platform supports 15 digital assets.

The next phase of Brazil's regulatory development is expected to place greater emphasis on stablecoin issuance and the tokenisation of real-world assets. Gomes identified property, gold, vehicles and financial receivables as potential areas of expansion, alongside the increasing use of stablecoins in cross-border payments and international trade.

However, several emerging cryptocurrency activities remain without dedicated regulatory provisions, creating uncertainty over how certain products and services will be supervised.

Licensing Could Create New Opportunities For Banks

Although the new requirements have placed pressure on smaller exchanges, they could also encourage partnerships between authorised cryptocurrency providers and traditional financial institutions.

Under such arrangements, banks, financial cooperatives and retailers could introduce cryptocurrency services without developing their own exchanges or custody infrastructure. Instead, regulated providers would supply the necessary technology and operational capabilities, allowing established financial businesses to expand their digital asset offerings.

Gomes emphasised that these partnerships would require clearly defined legal responsibilities, particularly where regulated activities are outsourced to third-party providers.

PSNA handled eight virtual asset mandates during 2026, including four central bank authorisation applications, three organised market exits and work involving the foreign exchange classification of a Brazilian real stablecoin. The firm's assignments included restructuring exchange operations, transferring customers to Brazilian entities and overseeing business closures while protecting customer balances.

The experience highlighted the operational complexity of the new licensing framework, with decisions involving regulatory categories, company directors, custody arrangements and corporate documentation frequently delaying applications.

Brazil's cryptocurrency market is now entering a period of consolidation in which regulatory compliance is likely to play an increasingly important role in determining which businesses can continue operating and how digital asset services are delivered.