Brazil crypto firms face consolidation after strict licensing deadline

Only approximately 40 cryptocurrency companies have applied for operating licenses in Brazil following a strict compliance deadline set by the Central Bank. While industry experts initially expected between 150 and 200 firms to seek authorization, the majority of virtual asset service providers (VASPs) have either failed to meet the requirements or opted to exit the market.

The new regulatory framework imposes rigorous standards regarding capital requirements, governance, anti-money-laundering controls, and operational resilience. The high costs of compliance and daily reporting requirements have reportedly forced smaller firms to wind down operations.

Starting November 6, banks will begin blocking transactions for unlicensed crypto firms, effectively severing their access to fiat currency. Companies that successfully filed applications will continue to operate while the central bank reviews their submissions, a process that can take up to two years. Firms that did not apply have one month from the October 30 deadline to exit the market in an orderly manner.