Our partner Tiago Severo Gomes took part in Declare Cripto's live broadcast, alongside Ismael Decol, on the question the market has been asking since the authorization deadline expired: can a foreign exchange keep serving Brazilians without Central Bank authorization?
The short answer is yes, as long as it does not cross the regulatory perimeter. The relevant point is a different one: the perimeter is defined neither by the name of the activity nor by the location of the head office, 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 re-engineering the operation seems to solve the problem without actually solving it.
In practice:
• The applicability test is the offer to Brazilians. Tiago pointed to article 3 of the LGPD as the analogical 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. Moving to a wallet, a crypto-to-crypto model or immediate conversion into stablecoin does not by itself remove the rule. When the structure needs a lot of engineering just to stay outside the rule, the risk has not disappeared: it has moved.
• A Brazilian partner that only does back-office work for a foreign exchange is not, in principle, a VASP under Resolution 520. Even so, it takes on reporting obligations before the Federal Revenue Service (Receita Federal), exposure to consumers and to Coaf, and liability if the platform abroad fails. That is something to be priced and contracted, not ignored.
• In the phased process, the bar is strict: applicants that do not meet the phase 1 requirements have their applications dismissed. For those close to the cut-off, the way out 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 caught the market off guard most was not compliance: it was the revision of capital requirements, which went from around R$ 5 million to something between R$ 37 million and R$ 40 million for the most complete structures.
As Tiago sums up, regulation is read backwards: if the entity runs into trouble and has to be liquidated, who is liable? That question, not the choice of corporate structure, defines where each player stands.
Full live broadcast: https://lnkd.in/dgSN3k6E
