Brazilian regulators demand daily guarantees of crypto exchanges’ asset holdings

Brazilian regulators say crypto exchanges will soon have to adhere to the same liability and security standards as the traditional financial sector.

The country’s permit-holding crypto trading platforms must begin submitting daily reports proving they have sufficient funds to cover the cost of hacks or other leaks, the central bank announced in a resolution on February 27.

The new rules also stipulate that exchanges must adopt the same data protection and confidentiality criteria that apply to Brazilian commercial banks.

“Investors will enjoy more security thanks to these regulations,” Denis Medina, a professor at the Faculty of Commerce of São Paulo, told Brazilian media outlet Conexão Record News. “But it will also benefit the entire system by preventing various crypto-powered financial crimes, such as money laundering and tax evasion.”

Brazil’s move comes as regulators around the world order crypto exchanges to beef up their security and liability credentials to the level of the banking industry. Financial chiefs in Japan made similar demands in November. South Korean regulators followed suit in December after the $30 million hack of the Upbit exchange.

Crypto accounting rules

Many of Brazil’s new regulations will come into effect on January 1, 2027, the central bank said. One of the new rules comprised an accounting manual for crypto exchanges and crypto pay firms.

This manual allows crypto companies to log crypto on their balance sheets, rather than having to convert the worth of their coins into fiat currencies.

The bank has also ordered crypto exchanges to keep their fiat currency and crypto holdings in separate accounts and wallets from those of their clients.

Medina said the rules will also impose limits and checks on transactions, particularly those made to overseas exchanges.

The academic said the rules effectively put an end to the “uncontrolled transfer of crypto to other countries.”

The new protocols will ensure the flow of crypto becomes more traceable in Brazil, Medina said.

The central bank says its new rules will make it harder for criminals to conduct illicit activities with crypto, such as drug trafficking and the financing of terrorist groups.

Tim Alper is a News Correspondent at DL News. Got a tip? Email him at tdalper@dlnews.com.