“Fire in the Playground”, these were the words chosen by Evandro Caciano dos Santos, director of operations at Trace Finance to talk about the latest consultation by the Central Bank (BC) on digital assets.
With 18 years of experience in the financial sector, more than 13 of them in foreign exchange, he wrote about the financial turmoil in the markets, following the publication of the Central Bank's Public Consultation 111. The turmoil is due to some suggestions for stablecoins. The new consultation by the Central Bank will analyze opinions from the crypto and financial industry in Brazil, in addition to proposing new rules for the digital asset market.
Crypto market and society react
Since Friday (11/29) both the crypto and exchange markets have been on edge, and the reason is the proposal to regulate the inclusion of virtual asset services in the exchange market.
Caciano said in a text published on his profile that he has been receiving numerous calls since Bacen published the document.
There is a sea of misinformation, rudeness in dealings and superficiality in defending their points of view. The financial expert outlined a scenario for the market's tumultuous reaction.
The technical expertise of the teams at the Central Bank of Brazil – It starts with the civil service exam, one of the most difficult in the country, followed by the internal incentive to continuous study. The academic level of the vast majority of them is higher than that of those who comment on their actions. We also have to say that everything has been done through broad debate with society, the accessibility of the employees is enormous, and to top it all off, they have constant dialogue with the best international cases, either directly or via the Bank for International Settlements – BIS, explains Evandro.
It's just a consultation, not a rule.
Evandro remembers that for now it is still just a public consultation and, therefore, there is still no rule.
We have until 02/28/2025 to express our opinion. But the manifestation has to be coherent. There must be a basis and justification. We have to take into account the role of the monetary authority, remembering that we have an organized market, such as the exchange market, which has a huge regulatory burden, which has specific rules that have been modernized in recent years, and which cannot simply gain new competition from the nothing, without limitations or restrictions.
For him, any restriction imposed would generate a new parallel exchange market like the one that existed in the 1980s and 1990s. (In fact, it already exists in stablecoins), he says.
Caciano ends the text with an appeal for society to participate and promised to return with new demonstrations after
“discuss and re-discuss, listen to those who know more, listen to other interested parties and the market itself”.
Crypto industry could be harmed
Vinícius Córdova, founder of Bitcorda, an educational initiative aimed at beginners and companies that want to introduce the cryptocurrency market to their employees, spoke to BeInCrypto Brazil about this. In addition, he addressed the most controversial points. One was the limitation of the operational volume and the second was the prohibition of operations involving stablecoins in self-custodial wallets.
Although it is just a public consultation, in practical terms, if a model like this is approved, it could harm the cryptocurrency industry in Brazil, explains Córdova.
The OTC market may face impacts
In context, the public volume traded in Brazil does not even represent 1% of the global volume traded in cryptocurrencies, even though Brazil is one of the largest players in Latin America. And within the cryptocurrency industry, one of the most important revenue-generating sectors is the OTC. In fact, it is a market that works with large volumes traded, mainly in USDT and BTC, explains Córdova.
Considering the context, the Central Bank could kill small cryptocurrency companies in Brazil with such regulation, believes the founder of Bitcorda. In addition to limiting volumes and preventing transfers to self-custodial wallets, they (the Central Bank) also introduce bureaucracy into the project that makes the companies' operations more expensive. Above all, it could make small competitors that are innovating in the crypto market unviable.
Considering that the cryptocurrency market is still recent, with few sources of revenue, and that it lacks many determinants to be successful, this consultation is an indication that the regulator is not inclined to guide players towards fair play, but to limit the access of small entrants and competitors in the market, who may have great difficulty in adapting to these determinations.
According to Vinícius, with this movement, these companies will choose to close their doors, or even move to countries with friendlier regulations. This is because the cryptocurrency market is global.
In my opinion, given the major limitations presented by the BC, there is a lack of a greater understanding of the positive impact that this industry generates on the economy and also closer monitoring that generates innovation and incentives for this industry that can be an important generator of jobs, innovation and revenue generation for Brazil.
Society gives its opinion on public consultation
On the public consultation page itself, it is possible to find, for example, some contributions from society. Erica Sampaio de Morais wrote that it was “indignant to observe the BC’s attempt to regulate stablecoins, imposing barriers that restrict financial freedom and innovation.”
Stablecoins offer a modern alternative to the traditional banking system, democratizing access to financial services, especially in underserved regions. However, excessive regulation imposes bureaucracy, costs, and difficulties, harming those who need these alternatives the most. Stablecoins are not the enemy, but a revolution that deserves encouragement, not obstacles.
“It makes no sense whatsoever to prohibit the withdrawal of stablecoins,” wrote Augusto Cesar Spadaccia Asciutti. “These currencies are crypto assets like any other, used to guarantee security for investors. The Central Bank should be concerned with investment realization, not with custody. If the stablecoin is realized, and the person wants to withdraw it in the form of money usable in the country, they will need to do so through a brokerage anyway.”
What they should be concerned about is ending unfair double taxation, which considers trade as a sale, forcing people to pay taxes above what is provided for in the tax rules themselves, believes Asciutti.
But as Caciano rightly points out, this is just a consultation and not the final rule. Therefore, many things can and should still change.
The article Public consultation on digital assets “catches fire” with rules for stablecoins. Understand was first seen on BeInCrypto Brasil.
