Fewer Than 10% of Brazil’s Crypto Firms Expected to Seek Licenses as October Deadline Nears

Fewer Than 10% of Brazil’s Crypto Firms Expected to Seek Licenses as October Deadline Nears

Brazil’s crypto market has entered a regulatory shakeout, with industry estimates indicating that fewer than 10% of companies currently operating in the country are likely to seek Central Bank authorization before an October deadline.

According to a Valor Investe report, people closely following the licensing process estimate Brazil has between 150 and 200 domestic and foreign companies providing virtual asset services, although some industry estimates put the figure closer to 300. Only 20 to 25 are expected to have the capital, structure or interest needed to apply, while roughly 10 could ultimately secure authorization as digital asset service providers, known locally as PSAVs.

The October 30 Cutoff

Companies that were providing virtual asset services before the new rules took effect in February have until Oct. 30 to file the first stage of their authorization request. Businesses that do not enter the process by the deadline will have 30 days to stop operating.

The estimates remain unofficial, and the true number of applications will not become clear until the filing period closes. Financial institutions that already hold a banking license from the Central Bank do not need a separate authorization to operate in the sector, while fund managers remain under the regulatory framework of Brazil’s Securities and Exchange Commission, the CVM.

A Wave of Exits and Restructurings

Several crypto businesses have already restructured or withdrawn from Brazil as the authorization deadline approaches. Bitnuvem closed its operations this year, citing higher operating costs and regulatory requirements among its reasons. NovaDAX followed in June, ending its Brazilian operation under an agreement that allowed customers to migrate to Foxbit.

Digitra.com later closed its retail business and directed customers to Foxbit, while BTG Pactual incorporated its Mynt crypto platform into the bank’s existing platforms, bringing the group’s digital asset activities within its broader structure.

Bitso changed its Brazilian retail model in early September through a partnership with Mercado Bitcoin, with retail customers directed to invest through Mercado Bitcoin while Bitso concentrates its local business on infrastructure and institutional services. Coinext subsequently announced it would close its retail operation after nearly a decade, ending crypto trading and custody services for those customers, though its institutional asset management business Coinext Asset will continue.

Unlike some of the earlier exits, Coinext directly cited the new regulatory environment when explaining its decision. The company said it assessed the requirements for remaining in the market, held discussions with potential partners and considered alternatives, but found no viable option. Industry participants cited by Valor Investe said further customer portfolio transfers are under negotiation, meaning more restructuring announcements could emerge before the transition period ends.

Capital Requirements Bite

Capital requirements have become one of the main issues facing companies deciding whether to seek authorization. During Public Consultation 109/2024, the Central Bank proposed minimum share capital of 1 million reais for virtual asset intermediaries such as exchanges, 2 million reais for custodians and 3 million reais for brokers carrying out both activities.

The final rules announced in November set considerably higher requirements. Depending on a company’s activities and risk profile, required capital can range from 10.8 million reais to 37.2 million reais, a multiple of the original proposal that has pushed smaller platforms toward consolidation or exit.

The authorization process extends beyond capital. Companies must also meet governance, compliance and technology standards aligned with international recommendations, raising the fixed cost of staying in the market even for firms that clear the financial bar.

Consolidation as the Endgame

The shakeout points toward a consolidated Brazilian market dominated by a handful of well-capitalized players, banks that need no separate license, and niche institutional operators. For the Central Bank, a smaller but better-supervised market appears to be an acceptable, perhaps intended, outcome of the framework.

For users, the short-term effect is friction: accounts migrating between platforms, retail relationships ending abruptly, and a shrinking menu of local exchanges. In the longer term, supporters of the framework argue, licensed operators under prudential supervision should offer stronger custody guarantees than the gray zone that preceded the rules.

The coming weeks will show how many firms blink first. With the Oct. 30 filing deadline approaching and an estimated nine in ten operators staying out, Brazil is about to find out just how much of its crypto industry survives contact with full prudential regulation.