Brazil Cracks Open Crypto Banking: New Rules Give Traditional Banks Clear Path to Digital Assets
Brazil just handed its financial giants a roadmap into the crypto frontier. The country's central bank unveiled a comprehensive regulatory framework specifically designed for traditional banks wanting to dive into digital assets—cutting through years of ambiguity.
The Blueprint for Entry
Forget vague guidelines. The new rules lay out exact operational, risk-management, and compliance requirements. Banks now know precisely what's needed to custody crypto, facilitate trades, and integrate blockchain services—no more guessing games.
Why This Move Matters Now
Brazil isn't just playing catch-up. With a massive, tech-savvy population and a history of inflation woes, the demand for alternative assets is real. Regulators are effectively co-opting the innovation of crypto-native firms while bringing it under the umbrella of established financial oversight. A classic move: tame the frontier by building forts on it.
The Institutional Floodgates
This isn't about letting a few fintechs experiment. This is a direct invitation for the nation's largest financial institutions to allocate capital and infrastructure. Expect a rapid scaling of on-ramps, product offerings, and mainstream adoption almost overnight.
A Jab at the Old Guard
Of course, the traditional finance sector, which spent years dismissing crypto as a 'fad,' now gets a government-sanctioned manual on how to profit from it. Nothing sparks innovation like the fear of missing out on a new revenue stream.
The bottom line? Brazil is betting that clarity breeds stability and growth. By bringing banks into the fold, they're aiming to harness crypto's potential while mitigating its wilder risks. The era of Brazilian banks dabbling in crypto is over. The era of them building it in is just beginning.
Brazil’s central bank formalizes crypto entry rules
IN 701 does not build Brazil’s crypto framework from the ground up. It applies sections of BCB Resolution No. 520 (Nov. 10, 2025) by defining the communication steps and the essential content needed.
Under IN 701, banks must maintain current registration in Unicad. Also, they must submit independent certification via the BCB’s APS-Siscom system.
If the bank does not complete all required steps, the communication is ineffective at the BCB. The bank stays barred from providing crypto services under the new rules.
Banks must hire an independent, qualified certifier to verify their compliance with the BCB rules for VASPs before starting operations.
The certifier must sign a declaration with the applicant bank, confirming no corporate or commercial ties that might cause a conflict of interest.
User funds must be separated
Certifiers must verify that institutions keep user funds separate from company assets and show evidence of reserves for all digital assets held by both customers and the company.
IN 701 requires the certification to clearly evaluate each item to determine if the institution meets baseline requirements.
The certification must include operational controls common in prudential frameworks. These controls involve outsourced services, especially data processing and cloud computing.
It must also assess the technical and legal compliance of key suppliers, including those abroad.
Recovery plans for client assets and funds are required. Governance policies, internal controls, and cybersecurity with incident response measures must also be addressed.
The certifier must examine controls related to anti-financial-crime compliance, including anti-money laundering, counter-terrorist financing, and proliferation-financing risks.
They must also review market integrity procedures aimed at detecting and stopping abusive actions in the virtual-asset market.
The certification should cover each required item individually.
The BCB may ask the certifier for more detailed explanations if needed.
IN 701 requires certifiers to verify that banks clearly inform customers about the services, support channels, key third-party providers, guarantee funds or insurance, custody processes, risks of the virtual asset and its blockchain, and the terms and risks of staking operations.
The rule now mandates certifiers to retain working papers and memos for five years, enhancing the BCB’s review capability.
Brazilian banks gain a faster path into crypto
Isac Costa, professor and director of the Brazilian Institute of Technology and Innovation (IBIT), says banks may function without fully completing the usual authorization process for common VASPs if they secure certification.
He told Valor Econômico that institutions may begin services 90 days after notifying the Central Bank, provided they have independent technical certification confirming full regulatory compliance.
The rules do not name the companies that will certify institutions, but Costa thinks auditors familiar with crypto will take on this role.
The central bank is likely to clarify this issue because these auditors play a key role in bringing banks into the crypto industry.
This is important for Brazil’s effort to promote crypto through banks.
Banks and brokerages in Brazil are interested in providing crypto trading and custody to retail investors.
The BCB’s method shifts some initial verification tasks to an external certifier but retains the supervisor’s authority to review, block, or stop actions.
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