Brazil Regulator Says 30% of 120 Crypto Exchange Filings Fail Capital Rules

Brazil's crypto licensing round has a problem. Of the 120 exchanges that applied to keep operating as virtual asset service providers, roughly 30% don't hold the share capital needed to meet the Central Bank's rules, according to the bank's inspection director.

Ailton Aquino delivered that number during a keynote at a conference, Livecoins reported. He pointed to Resolutions 519 and 520, which require each institution to hold up to $7.2 million in capital depending on how it is classified. Applications closed on Oct. 30.

Aquino also flagged a second flaw in the paperwork: many applicants didn't submit an audited financial statement, something the regulation demands. The regulator hasn't said which exchanges are short, only that the shortfalls could sink their applications once review begins.

The capital rules have already pushed firms out of Brazil, including Bitnuvem, NovaDAX, Digitra and Coinext. NoxPay founder João Paulo Oliveira thinks the damage goes further. “Judging by the tone of his talk, I think half of the 120 VASPs on the list are going to get rejected in this first round,” he posted on social media.

There's a deadline squeeze behind the filings. Since Nov. 6, banks have been banned from serving institutions that didn't apply at all, and companies that skipped the process have until Nov. 30 to wind down. Some in the market suspect firms applied knowing they'd fail, buying time and keeping banking access alive.

New entrants face a long wait too. The Central Bank has set a window of up to two years to weigh incoming applications, and an exchange can't operate in Brazil while its request is still pending.