Brazil regulators are working on a regulation on cryptocurrencies but there are tensions between banks and brokers — some banks have previously refused to open accounts with brokers because of risks. Additionally, the regulators have warned that local investment funds cannot invest in cryptocurrencies.
Bitcointrade, Mercado Bitcoin, Foxbit crypto exchanges recently created the Associação Brasileira de Criptoeconomia (ABCripto). In order to protect the interest of their users but found out that there is an existing organization created by some other exchanges.
It emerged that another organization by the name Associação Brasileira de Criptomoedas e Blockchain (ABCB) was formed by Atlas Project led group of exchanges. Natalia Garcia, who is vice president at ABCripto, says she recently found out about ABCB organization.
The two indicated that they might work together for the good of the country. Reportedly, ABCB was under construction since October 2017. ABCripto was then founded about a month after that.
The main concern for them is probably to defend exchanges and users in lieu of regulations. Brazil’s Securities and Exchange Commission said in January this year that local investment funds are prohibiting from investing in cryptocurrencies. Already, the regulators are working on a crypto regulation and have held public hearings on the same.
Also, the regulator said the acquisition of cryptocurrencies by investment funds was not acceptable. It added,
“Cryptocurrencies cannot be considering financial assets, regulator CVM ruled, in effect barring funds from investing directly in assets such as bitcoin.”
Already, larger banks such as Itaú, Bradesco, and Santander have shut down or refused to open some exchange broker’s accounts. Banks are basically trying to avoid the risks involved. Brokers on their part have been able to fight back and won court battles to have their accounts. It remains open while opening accounts with other exchanges. It looks like the battle is constant according to André Franco, a cryptocurrency analyst at Empiricus, a financial advisor in São Paulo.
ABCripto wants the country to regulate cryptocurrencies as assets. They will be looking to working together with all exchanges and even regulators on the same. ABCripto is aiming at creating various categories to attract a large number of crypto-related businesses.
On its part, ABCB wants to defend the crypto markets in Brazil, the privacy of users and regulations that will not end innovation in the country. This is according to the association’s president, Fernando Furlan. She said there is legal uncertainty about the industry, currently. He added that the current framework can treat crypto either as a financial asset or means of payment depending on their purpose. The association will aim to become a venue for providing a set of principles to its partners as well as regulatory assistance.
It will connect businesses related to cryptocurrencies, to authorities and regulators.
Brazil witnessing a lot of activity related to cryptocurrencies
About 1.4 million Brazilians engaged in either the purchase or sale of cryptocurrencies by the end of last year. However, when cryptocurrencies were at their best so far in terms of prices and value. Some cryptocurrency exchanges have recorded increasing number of users from an average of 500 per day to 5000 a day.
Despite this, there are certain limitations preventing growth. For instance, users report lacking coin diversity, delayed deposit approvals and high fees on these exchanges in comparison to other markets. Therefore, there is potential for more growth of these exchanges.
CriptoHub said it wants to launch a cryptocurrency exchange that helps eliminate these challenges.