Multiple Financial Authorities In Brazil Collaborate For Blockchain Regulatory Sandbox
- Brazil’s financial authorities are collaborating on a regulatory sandbox for multiple types of fintech.
- The country has the highest number of crypto holders in all of Latin America.
Blockchain technology has been one of the most popular fintech endeavors to come out of cryptocurrency or any other market in the last decade. In order to understand the technology better for Brazil’s economy and potential use cases, four of the major financial authorities are getting together now to determine how to regulate different emerging technologies, which includes blockchain technology.
The four authorities include the Ministry of Finance, the Central Bank of Brazil, the Securities Commission, and the Superintendent of Private Insurance. These entities announced their plan to manage their regulations in a way that allows it to handle fintech and cryptocurrencies. With these new regulations, Brazil’s markets for securities, finances, and capital, according to the regulators working on the matter. Their work will also include the implementation of a regulatory sandbox, creating fertile ground for fintech ideas.
Much of the purpose of creating this sandbox has to do with the increase of commercial activity around the technologies. The regulators commented, “The use of innovative technologies as distributed ledger technology, blockchain, robo-advisors and artificial intelligence has allowed the rise of new business models, reflecting a bigger offer and reach.”
With blockchain technology, the Secretary of Treasury has discussed how the financial market in Brazil will use DLT. Presently, Brazil has Latin America’s highest number of cryptocurrency holders, and even has the fourth highest number of users anywhere in the world. According to experts, there is presently 8% of the population in Brazil that will ultimately hold a crypto asset of some kind by this year.
Along with this new regulatory initiative, the Financial Supervision Counsel of Brazil announced regulation for cryptocurrency earlier this year. The regulation goes by the same rules as with money laundering, and scofflaws can even result in fines worth up to $5 million.
As the regulatory space starts to change how cryptocurrency is limited and how blockchain technology is applied to business, there are more and more merchants that don’t have the adequate classification in the market right now. Without the recognition by the financial entities, new businesses are not able to effectively get into the fintech space. Even with the regulations, banks and other institutions are allowed to deny bank accounts to these businesses.
How will the new sandbox change the acceptance of businesses in the traditional financial sector?