Brazil's central bank has announced that it will be dividing the process of regulating crypto-assets and virtual asset service providers into phases, with regulatory proposals now expected by the end of this year.

This decision effectively postpones the completion of the process following a 2022 law on the subject, which paved the way for subsequent regulation by the central bank.

Initially, the bank's director of regulation, Otavio Damaso, had projected during a congressional hearing last year that regulation would be wrapped up by June 2024. However, after launching a public consultation on the matter in December 2023, which concluded in January, the central bank has decided to open a new consultation in the second half of this year.

The central bank said that the first public consultation aimed to gather input from Brazilian citizens, also addressing issues not covered by the 2022 law, such as the asset segregation of virtual asset service providers. This required "reasonable dedication from the teams involved in the regulatory work," the bank stated, adding that the diversity of activities conducted by entities in the virtual assets sector and the various structures of these entities necessitated this preliminary effort.

"The second public consultation, now focused on regulatory texts, aims to use the initial input to, once again with broad support from society, establish a robust regulatory framework," the central bank explained.

This decision effectively means that the completion of the crypto-asset regulation process in Brazil will be delayed beyond the initially projected timeline.

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