TerraLex Cross-Border Guide to Crypto Assets

Crypto assets are regulated by Law 14.478/22 (Crypto Currency Law), which defines "virtual assets" as the digital representation of value that can be traded or transferred by electronic means and used for payment or investment purposes, except for:

(i) national and foreign currencies; (ii) electronic currency; (iii) instruments that provide the holder access to specific products or services or to benefits from those products or services, such as loyalty program points and rewards; (iv) assets which issuance, bookkeeping, trade or settlement is foreseen by law or regulation, such as securities and financial assets.

Crypto assets, in most cases, are treated as intangible assets.

Crypto assets are regulated under Crypto Currency Law, which came into full effect in June 2023.

Crypto Currency Law establishes that a specific agency or entity of the Federal Public Administration shall be defined or created to specify the regulated virtual assets, to authorize the rendering of virtual assets' services, and to issue the specific regulations according to the principles and guidelines set forth in the Crypto Currency Law. In this sense, the Brazilian Central Bank (BCB) was designated, according to Decree 11.563/23, the competent authority to effectively regulate and authorize the provision of virtual asset services providers in Brazil.

The specific regulations issued by BCB shall observe, among others, the following principles:

• free competition;
• governance, transparency and risk-based approach;
• information security and protection of personal data;
• protection and defense of consumers and users;
• protection of popular savings;
• sound and efficient of operations; and
• prevention of money laundering, financing of terrorism and of weapons of mass destruction, in line with international standards.

In addition, Crypto Currency law establishes that virtual assets transactions shall also be subject to the Brazilian Consumer Code, Brazilian Criminal Code, Law on Prevention of Money Laundering, as well as Law on Crimes Against the National Financial System.

In order to prevent money laundering, entities that provide crypto assets related services must keep updated records of clients, transactions and operations involving said assets. Additionally, some provisions in this regard were included in the Law on Prevention of Money Laundering, increasing the penalties for crimes involving crypto assets.

There is no specific regulation regarding the use of blockchain in the financial services sector in Brazil. However, in 2019 the Interbank Chamber for Payments (CIP) alongside with the Brazilian Bank Federation (FEBRABAN) developed the called Rede Blockchain do Sistema Financeiro Nacional (RBSFN – Blockchain Network from the National Financial System) which allows the use of blockchain technology for multiple financial institutions. In 2020, the Brazilian Central Bank launched the Pier platform which uses blockchain technology to integrate data from regulatory authorities and expedite authorization/registration processes requested by financial institutions.

Despite the lack of specific tax regulation regarding crypto assets until now, in 2019 the Federal Revenue issued a Normative Ruling establishing situations where all individuals and legal entities resident or domiciled in Brazil shall inform the details of operations carried out with crypto assets.

In 2021, the Federal Revenue determined that the capital gain ascertained from the disposal of crypto assets shall be taxed by the Individual Income Tax (IRPF), unless such gain is equal to or less than BRL 35.000,00 in a month. Furthermore, crypto assets must also be declared by individuals to Federal Revenue in their annual income tax return whenever the acquisition amount of each type of crypto asset is equal to or exceeds the amount of BRL 5.000,00.

Also, the Federal Revenue concluded, in December 2024, a public consultation regarding a new Normative Ruling concerning the situations where all individuals and legal entities resident or domiciled in Brazil shall inform the details of operations carried out with crypto assets.

While the Crypto Currency Law primarily focuses on regulating crypto asset service providers, it also reinforces the notion that crypto assets can be recognized as a type of property under the Brazilian Jurisdiction.

Considering that Crypto Currency Law lacks specific provisions regarding those topics and that crypto assets are normally considered movable assets in Brazil, the competent jurisdiction is the one where the owner of the asset is domiciled.

General standards regarding contracts shall be applied to all contracts, including the ones involving crypto assets. Should the contract meet the applicable legal requirements, it will be considered legally binding.

Yes. Since crypto assets are considered movable assets, there are Court rulings establishing crypto assets take overs. This situation is likely to happen to satisfy a debt that is being judicially executed, upon the express determination of the competent Judge.

No, there is no such provision up to now.

There are some draft bills regarding crypto assets under discussion in the Brazilian Congress, dealing with various topics related to crypto assets, such as digital inheritance, mitigation of greenhouse gas emissions, investments in cryptocurrencies and money laundering prevention through the use of cryptocurrencies.

However, the next regulation regarding crypto assets shall be enacted by BCB, considering that it opened, in November 2024, a public consultation regarding proposals to regulate the provision of virtual asset services and the respective authorization process, according to Crypto Currency Law and Decree 11.563/23.

After the approval of a specific legislation on crypto assets in Brazil, the scenario remains positive and promising. In addition, the Federal Government has also taken several initiatives that demonstrate its good intentions towards blockchain technology and crypto assets such as Digital Government Program (Law Nº 14.129/21) and the creation of the Special Secretariat for State Modernization which has coordinated with federal public administration entities the development of the Brazilian Blockchain Network. It is also worth mentioning the initiative of the Brazilian Central Bank to create the Electronic Real, called Drex.

The Crypto Currency Law is considered strict and restrictive by many people, in view of the State’s interference in crypto assets related transactions and operations. What was expected by the experts was a possibility to regulate this market in a way that also allowed self-regulation without the need for greater State interference.

Furthermore, Law Nº 13.874/19 also called the Economic Freedom Act, created with the purpose of reducing bureaucracy, made it possible to issue CMN Resolution 4,865/20 which "Establishes the guidelines for the functioning of the Controlled Testing Environment for Financial and Payment Innovations (Regulatory Sandbox)". The first round launched by the Brazilian Central Bank has already begun and has prioritized topics such as solutions for the foreign exchange market.