The Central Bank of Brazil has issued new regulatory measures aimed at strengthening anti-money laundering and terrorism financing oversight for digital asset transactions involving self-custody wallets.
On Wednesday, the central bank released Resolutions 588 and 589. According to the bank, digital asset transactions where wallets are under complete user control can reduce the availability of information for monitoring and risk assessment purposes compared to assets held by authorized institutions.
New Reporting and Counterparty Restrictions
Resolution 588 mandates that authorized institutions report virtual asset transfers to or from self-custodial portfolios when the transaction value equals or exceeds the equivalent of $10,000. Submitted data will go to the Council for Financial Activities Control (COAF), potentially establishing a database for these addresses and mapping holdings.
Resolution 589 closes the regulated Brazilian crypto system to unauthorized entities by banning operations that involve counterparties providing virtual asset services without proper authorization to operate in the country.
Timeline and Industry Impact
The rules are scheduled to take effect on October 1, 2026, coinciding with the expiration of the deadline for virtual asset service providers (VASPs) to obtain operational authorization in Brazil. The heightened compliance burdens and capital requirements have impacted the sector, with only five VASPs having applied for a license as the industry faces consolidation.
