Our Partner Tiago Severo Gomes took part in the Declare Cripto livestream, alongside Ismael Decol, on the question the market has been asking repeatedly since the authorization deadline expired: can a foreign brokerage continue serving Brazilian clients without authorization from the Central Bank?
The short answer is yes, as long as it does not cross the regulatory perimeter. The relevant point lies elsewhere: the perimeter is defined neither by the name of the activity nor by the location of the headquarters, but by what the entity actually delivers to the Brazilian client. Resolution 520 carved out three activities (intermediation, brokerage and custody) and left out tokenization and stablecoin issuance. This created zones in which restructuring the operation seems to solve the problem without actually solving it.
In practice:
- The test for applicability is the offer to Brazilians. Tiago pointed to Article 3 of the LGPD as the analogous reference the firm uses: Brazilian law reaches anyone who offers a product or service to people in Brazil, regardless of where the entity is incorporated.
- Changing the architecture does not change the classification. Migrating to a wallet, to a crypto-to-crypto model or to immediate conversion into stablecoin does not take an entity outside the rule by itself. When the structure requires a great deal of engineering merely to avoid falling under the rule, the risk has not disappeared: it has moved elsewhere.
- The Brazilian partner that only performs the back-office functions of a foreign exchange is not, in principle, a VASP under Resolution 520. Even so, it assumes reporting obligations before the Receita Federal, exposure to consumers and to Coaf, as well as liability if the platform abroad fails. This is something to be priced and contracted for, not ignored.
- As to the phased approach, the bar is high: an applicant that does not meet the phase 1 requirements has its application dismissed. For those close to the cutoff, the solution has been a migration plan, with a gap analysis and a commitment to progress within the 60 days of phase 2. It is not a silver bullet. And what hit the market hardest was not compliance: it was the revision of the capital requirements, which went from around R$ 5 million to somewhere between R$ 37 million and R$ 40 million for the most complete structures.
As Tiago sums it up, regulation is read backwards: if the entity has a problem and needs to be liquidated, who is liable? It is this question, not the choice of corporate structure, that defines where each player stands.
Watch the full livestream.
