The Central Bank of Brazil has revealed its aim to launch a central bank digital currency (CBDC) in 2024 following a closed pilot programme. According to Bank of Brazil officials cited by Reuters, Brazil’s central bank digital currency would be designed in such a way as to encourage banks to tokenize their assets with considerable efficiency gains.

The same officials added that a CBDC should not disturb monetary policy or hurt banks' balance sheets. Moreover, the tokenisation of deposits could improve the banks' settlement, auditing, and funding costs. The International Monetary Fund (IMF) has given feedback on this new digital currency model and noted its ease of implementation.

The IMF suggested that other central banks should investigate this model as well. Bank of Brazil representatives also predicted a rise in the popularity of the Pix instant payment system as users will be able to access cheaper credit through the system without having to pay the merchant discount rate (MDR) fee. In November 2022, Banco do Brasil (BB)  has announced that its customers can make transfers via PIX from other financial institutions to BB's account through the bank's WhatsApp channel.

The functionality went live on 31 October 2022. In August 2022, Brazil’s central bank allowed customers to complete the journey of consenting to data sharing within the scope of Open Finance through WhatsApp. Moreover, BB was reportedly the first large bank in Brazil to operate as an initiator of payment transactions and to offer customers the transfer of funds from other banks via PIX without leaving the BB application.

Cryptocurrency regulation in Brazil According to ihodl. com, in November 2022, the Brazilian Chamber of Deputies has approved a bill to regulate the crypto industry. The document, which is authored by deputy Aureo Ribeiro, introduces a new type of crime namely fraud using digital currencies.

The punishment for this crime is two to six years in prison, as well as a fine. The new rules would apply to legal entities that exchange virtual currencies for local or foreign currencies, exchange virtual assets, conduct transfers or are involved in financial services connected to issuers or vendors of virtual assets. Crypto assets classified as securities will be regulated by the Brazilian Securities Commission.

As for the remaining cryptocurrencies, they will be supervised by another department. With the approval of the bill, companies in the crypto industry will need to obtain licences to become virtual asset service providers. The move follows the collapse of Bahamas-based crypto exchange FTX, which shook the cryptocurrency industry on a global scale.

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