Nearly one-third of the 120 cryptocurrency exchanges that filed to continue operating in Brazil as virtual asset service providers fail to meet the share capital required under Central Bank of Brazil regulations, according to Ailton Aquino, the central bank’s inspection director. The shortfall could put their applications at risk after review.
The filings were submitted ahead of an Oct. 30 deadline for exchanges to meet requirements to become licensed and keep operating. While the central bank published a list of 120 entities that applied, Aquino said at a conference that at least 30% of the exchanges did not have the share capital needed to comply with the regulator’s resolution.
Capital rules and missing audits
Aquino referred to new capital requirements under Resolutions 519 and 520, which require each institution to hold up to $7.2 million in capital, depending on its classification. He also said that a large number of the firms that filed applications did not include an audited financial statement requested by regulation.
The remarks raised concerns in the cryptocurrency ecosystem about a possible reduction in the options Brazilian institutions and customers have to access digital asset financial markets. João Paulo Oliveira, founder of crypto-enabled payment service provider NoxPay, estimated that a significant number of the institutions could be rejected by the central bank even after applying.
“Judging by the tone of his talk, I think half of the 120 VASPs on the list are going to get rejected in this first round,” Oliveira said on social media.
Market exits and transition deadlines
Earlier reports indicated that the capital measures have already prompted several companies to exit the Brazilian market, including Bitnuvem, NovaDAX, Digitra, and Coinext.
Some have suggested that institutions may have applied knowing they would be rejected in order to buy time and avoid being blocked by banks. Since Nov. 6, banks have been banned from providing services to institutions that did not submit applications. Companies that did not apply have until Nov. 30 to wind down their operations.
The central bank has established a period of up to two years to consider applications from companies seeking to enter the Brazilian market. During that period, an exchange will not be able to operate until its application is approved.
