Brazil's regulatory framework for virtual asset service providers has reached an important milestone. Under Resolution BCB No. 589, issued by the Central Bank of Brazil on September 23, 2026, financial institutions, payment institutions, and other entities authorized by the central bank are prohibited, from November 6, 2026, from conducting or facilitating virtual asset market operations involving service providers that are not authorized by the regulator, except where expressly permitted under the applicable rules.
The measure does not amount to a blanket prohibition on banks working with all cryptocurrency businesses. Instead, it directly links the eligibility of financial counterparties to their regulatory authorization status. For crypto exchanges, custody providers, payment companies, and digital asset businesses that rely on banking infrastructure, authorization by the Central Bank of Brazil is becoming increasingly important for maintaining local operations and financial access.
What Does Brazil's New Crypto Rule Restrict?
Resolution No. 589 amends the central bank's earlier Resolution No. 520, including changes to Article 91, which establishes restrictions on transactions between regulated financial institutions and unauthorized virtual asset service providers.
The requirements apply not only to traditional banks but also to payment institutions and other entities authorized to operate by the Central Bank of Brazil. The central restriction is that these institutions may not conduct or facilitate virtual asset market operations involving service providers that lack the required authorization.
The potential impact therefore extends to banking services, payment processing, settlement arrangements, and other financial infrastructure supporting crypto-related activities. However, whether a particular transaction falls within the restriction depends on its structure, the status of the counterparties, and any exceptions expressly provided by the regulation. The rule should not be interpreted as prohibiting every banking activity connected to digital assets.
Crypto Providers Must Review Authorization and Banking Relationships
For virtual asset service providers operating in Brazil or planning to enter the market, obtaining the applicable regulatory authorization is becoming a key compliance priority. Businesses should assess whether their activities fall within the scope of services supervised by the central bank and prepare the necessary authorization applications and supporting documentation based on their business model and regulatory category.
Companies that already maintain relationships with banks and payment institutions should also review their counterparties and transaction arrangements. Platforms using third-party payment providers, agents, or intermediaries should determine whether their transaction structures involve virtual asset service providers that have not obtained the required authorization.
Financial institutions will need to strengthen their counterparty due diligence procedures as well. Confirming that a company is legally registered may no longer be sufficient. Institutions should establish processes to verify regulatory authorization, conduct periodic reviews, and update business relationships when a counterparty’s regulatory status changes.
New Requirements Could Reshape Brazil's Crypto Market
Brazil has continued to develop its regulatory framework for virtual asset service providers. By restricting business relationships between regulated financial institutions and unauthorized providers, the latest measure further connects the crypto sector with the compliance requirements governing traditional financial infrastructure.
For compliant businesses, clearer authorization requirements may support a more structured market-entry environment. At the same time, they create additional licensing, disclosure, and ongoing compliance responsibilities. For providers that have not obtained authorization, access to banking and payment channels may become a significant constraint on business expansion.
From a financial crime compliance perspective, clearer regulatory status can help financial institutions conduct customer due diligence, assess counterparty exposure, and improve transaction monitoring. However, regulatory authorization does not eliminate the possibility of money laundering, fraud, or sanctions exposure. AML/CFT controls must continue to operate independently.
The broader message from Brazil's new rules is that market access for crypto service providers is becoming more closely connected to the compliance standards of the traditional financial system. Businesses seeking a sustainable presence in Brazil will need to make regulatory authorization, counterparty screening, and ongoing risk monitoring central parts of their operating framework.