Brazil’s central bank intends to tighten regulation of the cryptocurrency industry to combat tax evasion and illegal activities.

At a recent speech in parliament, the governor of the Brazilian Central Bank, Roberto Campos Neto, expressed concern about the growing popularity of cryptocurrencies among local residents. According to the official, from January to August 2023, the adoption of cryptocurrencies among Brazilians increased by 44.2% compared to the same period in 2022. In total, Brazilians invested about BRL 35.9 billion ($7.4 billion) in cryptocurrencies in 2023. Neto also noted that stablecoins are especially popular among the local population.

“It is believed that local demand has shifted towards stablecoins pegged to real assets such as the US dollar. Moreover, people more often use cryptocurrencies as a means of payment rather than for investment. “A lot of things about cryptocurrencies are related to tax evasion or illegal activities,” said the governor of the Central Bank of Brazil.

Therefore, Neto said that the Central Bank will tighten regulation of the crypto industry and strengthen supervision of brokers working with digital assets. According to a government decree dated July 13, the President of Brazil must determine the agency that will regulate digital assets. Although the Brazilian central bank is authorized to issue licenses to virtual asset service providers, the regulation of crypto projects falls under the authority of the Securities and Exchange Commission (SEC) of Brazil.

Let us recall that last year the Central Bank of Brazil spoke out against tightening the approach to regulating cryptocurrencies, so as not to interfere with the development of innovation in the country. Meanwhile, the regulator is actively working on creating its own digital currency called DREX, which is designed to expand public access to banking services.