Many BTC companies may have to close in Brazil

[GeorgeJohn]

Government have never been fair with cryptocurrency exchange, especially Bitcoin..they're still having the mindset that crypto exchanges is affecting their currencies and it's meant for corruption...The reason of the high tax on the exchanges is to eliminate most of the bigger companies...my country government has had several issues with Binance...at end they succeeded to chase Binance out and left the minor exchanges...That's why the volume of P2P increases in my country...just expect that the volume of p2p will increase after government of your country succeeds to achieve their obligations.

[Frankolala]

We don't have strict regulations down here in my country by the government. I believe that the few exchanges that will be operating will be able to cover up all crypto transactions in Brazil. Government will always tax these exchanges very high and come up with stricter laws that will send the smaller exchanges packing since they cannot meet up with the government requirements.

[Hamza2424]

I have read about the new capital requirements for virtual asset service providers in Brazil, and even though the requirements are not too stringent, smaller VASP's would be unable to fulfil them. A mandatory reserve of $7.2m is small money for big platforms, they already have far greater than that and this new law has no effect on their operations.

It may look like smaller services are the target here, but it is also be designed to protect customers, in order to ensure that these services have enough funds in reserves to cover liabilities. I believe this law is a positive one for crypto users in Brazil.

$7.2m is small money for big platforms, but what about the rest of the 270 to 280 platforms? They won't be able to do it. Brazil does not want them to hold dollars, they want them to hold Brazilian currency, so there is that difference too. I am not sure about the strictness though.

But this is a bad move by Brazil, they want everyone out of competition and only the big companies like Binance and Coinbase can stay and they can play as they want.

I am seeing a huge increment in the demand for DEXes and no KYC exchanges.

[Nathrixxx]

You can imagine that in a country where over 300 crypto exchanges are operating, there is a high probability of finding enough of them that are only doing this to perform an exit scam with people's assets on their platform, so therefore by this reason, I will also join to support them regarding this. It will also serve as a warning to those who are always investing their assets in centralized exchanges when they should have them on non-costodial wallet.

[Coin_info]

It’s just one of those many steps government take to ensure they remain in control.

The government with their move to try to maintain control are helping popularize bitcoin more because there are people who it will be through all these moves from the government that they will get to hear about bitcoin. At a time when Bitcoin was not yet matured many investors would have been afraid and then choose to sell off their Bitcoin because they would have felt like this move would have affected Bitcoin in general but with the knowledge that crypto investors have , they understand that even if the government of their country go ahead to tighten things or regulations concerning Bitcoin, they still not need react under fear because the government cannot shut down bitcoin.

[Dogedegen]

Regulation of this kind of thing is hard because it is impossible to find a perfect balance, I am not commenting in particular of the specification of the regulation in Brazil but the problem of regulating overall. Firstly in situations when you have very little regulation you can get all kinds of benefits from that. There is more competition and it makes it easier for small companies to enter the market, more startups and more innovations and also more choices for customers. But there is also the issue that when you have it simple like that, it is also easy for bad actors to join. So you can have many scams, badly managed companies, low security and other issues. We have seen so many exchanges get hacked, run away with funds or act shady in crypto..

The other side of this is heavy regulation. When you have very strict rules then in theory it should remove a lot of the worst operators from the market, and give better assurances to the consumers. Companies that are left should be more legitimate and reputable. The negative of this is that competition is lower, small startups stand no chance when the situation is too regulated. Many companies will not be able to afford the capital requirements or other compliance requirements, and with time this can lead to very little innovation as the big players are just controlling the market.

That is the issue with regulating companies like this, too little is bad but also too much is bad. There isn't any known defined point or balance that can be seen the perfect. Countries need to find some middle ground rules where they will try to protect the consumers but also not over regulate so that they kill all the startups and companies in the industry.

You can imagine that in a country where over 300 crypto exchanges are operating, there is a high probability of finding enough of them that are only doing this to perform an exit scam with people's assets on their platform, so therefore by this reason, I will also join to support them regarding this. It will also serve as a warning to those who are always investing their assets in centralized exchanges when they should have them on non-costodial wallet.

Yeah this is a big problem world wide that is why rules are also getting tighter everywhere. Too many shady companies and individuals behind them.

[Coyster]

The reason of the high tax on the exchanges is to eliminate most of the bigger companies...

The situation we're currently discussing about in Brazil is actually the opposite. The capital requirement is going to put many small virtual asset service providers out of business in Brazil, it is the bigger platforms that would pass the requirement easily.

I am seeing a huge increment in the demand for DEXes and no KYC exchanges.

That makes it a win-win situation if people move to these No-KYC service. But they also have their limitations in terms of liquidity, so i still see the majority of crypto users basically moving to the bigger VASP's.

[Somegory]

I like where this is all going, like what happened to P2P normally? I feel people are too lazy it's why they are using centralised exchanges, if privacy is very important to people I believe that even Binance exchange will struggle.

So I am in support and good mood that this is happening, let this continue and people will start to have some senses about all the wrongs they have been doing without even knowing.

We should all be using Dex or P2P to buy and sell Bitcoin, centralised exchanges means total control and rule over cryptocurrency holders around the world.

[Aanuoluwatofunmi]

I am seeing a huge increment in the demand for DEXes and no KYC exchanges.

That makes it a win-win situation if people move to these No-KYC service. But they also have their limitations in terms of liquidity, so i still see the majority of crypto users basically moving to the bigger VASP's.

Which one is VASP's, if I may ask? I may not be that familiar with some of the terms you are using like that.

Bitcoin was not intended from the start to be used through a centralized exchange. Bitcoin is a decentralized digital currency which talks more about privacy and how we can have our assets in non-custodial storage, but many are running out of patience to go through the normal process of investing in Bitcoin rather than engaging in other additional services by using a centralized platform to maximize their ability to profit, neglecting the risk of using a centralized platform. A decentralized exchange is still the best option to consider.

[Jaweria parveen]

The reason for this may be that more people in Brazil are not investing in Bitcoin and this company is not growing much, so it may have to close. In addition, they are running with a scam that will harm people, which is why this situation is happening there now. The business associated with Bitcoin is growing a lot, but where people do not have investment, Bitcoin does not have much impact. There was a lot of noise about Bitcoin in Brazil, but now things are cooling down a lot. The price of Bitcoin has also increased somewhat, but despite this, no new changes have been seen in Brazil. If people there or people outside show a little interest in Brazil, their company can grow. As Bitcoin is growing, the company's situation is not growing much.

[Agbamoni]

We already know here in Brazil that the Central Bank is tightening the rules for BTC (and crypto) exchanges operating here, but there may be very few companies left due to the high requirements they’re imposing

The high requirements are probably making it easier for the government to enforce continued regulation and policies for crypto. 300 crypto exchanges in one country is high IMO. This is the best thing the government could do to remove scam exchanges and make sure the ones that exist are fully regulated.

Basically, only the big players or those with deep pockets will remain
Smaller companies may be acquired by larger ones

It often turns out that the smaller companies joining together to become one eventually become the big players with time. In my country, the cost of effective operation increased so much that some traditional banks could not meet the requirements. A few banks started merging. Currently, the banks that merged are now called the big players in the banking system within the country. Nothing beats the power of cooperation.

[Negotiation]

It often turns out that the smaller companies joining together to become one eventually become the big players with time. In my country, the cost of effective operation increased so much that some traditional banks could not meet the requirements. A few banks started merging. Currently, the banks that merged are now called the big players in the banking system within the country. Nothing beats the power of cooperation.

Well, Small companies can merge to form a larger entity; the example you cited regarding banks illustrates this well. This often happens in many countries when a bank fails to deal with loan defaulters or recover outstanding funds; in such cases, smaller banks merge to form a single, consolidated bank, which can facilitate more efficient operations.

In the realm of cryptocurrency, it is quite possible for several small companies to merge and form a single, larger entity—such as an exchange or a cryptocurrency firm. Furthermore, I believe that the acceptance of cryptocurrency is steadily growing and will continue to increase in the future.

[Jubilee58]

This could be a sign of backwardness in Bitcoin, and other cryptocurrency adoption in Brazil. While their are many countries, and institutions embracing the use of Bitcoin, and giving it recognition as a store of value, and as an asset for growing wealth, it seems there are still some countries that are still doubting the potential of Bitcoin. However, with time, I think they might see see the need for proliferation of block chain companies, and Bitcoin as well. There are also some countries who even denied their citizens from Bitcoin, and other cryptocurrency investment, but the success of Bitcoin, and the adoption by big institutions have made them to embrace Bitcoin investing. Once there are rules making some some companies to close down either as a result of tax, and giving more opportunity to the big companies, is a barrier that will hinder many Brazilian from fully partaking in Bitcoin investing.

[YOSHIE]

Many BTC companies may have to close in Brazil

Maybe the Brazilian government has taken into account the consequences that will happen to the Brazilian people, especially those who use exchanges and cryptocurrencies. We know that in Brazil there are 300 crypto companies operating there, of course this is not a small number, with various considerations regarding criminal acts of course the Brazilian government made strict regulations, but after these regulations were implemented there were many crypto changes which closed only 25 crypto exchanges survived, this is clearly a big exchange that is able to comply with the rules and that has an official license, the rest have to go out of business.

When the minimum capital for each crypto exchange is set at $2.1 million to $7.2 million US, this is clearly only a small portion of the 300 existing exchanges, plus the rules for withdrawals above $10,000 must be postponed, I think the Brazilian government has made every effort possible to overcome things that are undesirable for Brazilian society in general, even though small crypto companies operating there are manageable and safe.

[MArsland]

What’s the situation like in your country?

The situation is not much different it's just that the role of local exchanges remains so the last bridge that definitely remains to be used to attract to fiat. Many outside companies operate and even some local exchanges join or are acquired in order to survive but some survive and become competitors. Based on personal observations the gap between outside and local exchanges exists in trading costs, trading features, volume and real time services where outside exchanges still excel.

[Die_empty]

$7.2m is small money for big platforms, but what about the rest of the 270 to 280 platforms? They won't be able to do it. Brazil does not want them to hold dollars, they want them to hold Brazilian currency, so there is that difference too. I am not sure about the strictness though.

But this is a bad move by Brazil, they want everyone out of competition and only the big companies like Binance and Coinbase can stay and they can play as they want.

I am seeing a huge increment in the demand for DEXes and no KYC exchanges.

There is also a positive dimension to these restrictions. Are all these 280 exchanges trustworthy? I support small businesses to grow, but reducing the financial requirements could also give fraudulent businesses a platform. The goverment should have given small exchanges options like reducing the amount they can transact. Affected exchanges might move to friendly countries or sell off to bigger companies.

Which one is VASP's, if I may ask? I may not be that familiar with some of the terms you are using like that.

Virtual Asset Service Provider. It includes organizations or entities that are involved in crypto-related businesses.

[Hamza2424]

There is also a positive dimension to these restrictions. Are all these 280 exchanges trustworthy? I support small businesses to grow, but reducing the financial requirements could also give fraudulent businesses a platform. The goverment should have given small exchanges options like reducing the amount they can transact. Affected exchanges might move to friendly countries or sell off to bigger companies.

Yep, we can't unsee what good it can do, because I am also not aware of all other exchanges, and most of them might be fraudulent or created for scamming in the future. Therefore, customers' funds should be kept secured by allowing them to trade on an exchange that can be held responsible. But if this is the case, then why even require them to deposit $7 million? This might feel like escrow, but it is not because the amount is too low for this.

They seem to be doing it for the adoption of their own currency, that's the main goal here, and governments always play like this, not for just one benefit but for another which you have defined.

[Nathrixxx]

I detest the government coming to the public to declare that the supported the use of crypto from the list of suggested platforms that are regulated by them, because all of these are going to be in our favor, but rather in the interest that is going to benefit them, as they will incentivize every user who is identified on the platform. You should embrace decentralization and convert anything that links us to a centralized crypto platform being regulated by leaders.

[Dogedegen]

I like where this is all going, like what happened to P2P normally? I feel people are too lazy it's why they are using centralised exchanges, if privacy is very important to people I believe that even Binance exchange will struggle.

It is not so simple to assign it to laziness, because P2P comes with huge risks and there are strict banking laws and monitoring in place. If you transact with a suspicious person in P2P or they send you stolen money from someone's account then you can have a lot of problems. Many people will not consider these risks and potential issues worth the little amount of transacting that they do. I can understand that completely. As laws and regulation suppresses P2P transactions and makes them less profitable, there is a lower number of reputable big volume traders. So even if these platforms that still remain have some kind of reputation systems, many times these issues show up only months later after many transactions have been completed by the shady people..

We should all be using Dex or P2P to buy and sell Bitcoin, centralised exchanges means total control and rule over cryptocurrency holders around the world.

In some perfect world things would be like that, but we live in hard times. Besides the risk that I mention above, P2P also makes selling harder in the world that we live in and so much more if you want to legally declare it all and have it in your own bank. Many people use the centralized options also because of that document trail, that makes reporting and proving much easier.

The high requirements are probably making it easier for the government to enforce continued regulation and policies for crypto. 300 crypto exchanges in one country is high IMO. This is the best thing the government could do to remove scam exchanges and make sure the ones that exist are fully regulated.

The number of companies depends on the adoption in a country, so we should not quickly state that it is too high just like that even if you are right. If there was huge adoption in Brazil then I could understand that many exchanges, but this is not the case so some government intervention is needed. I wonder if there are some research papers that tried to estimate the losses with scam or shady exchanges in a country or around the whole world.

[CryptoBuds]

Basically, only the big players or those with deep pockets will remain
Smaller companies may be acquired by larger ones
The government here has done this to several other sectors as well, increasing tax revenue and stifling an industry until practically nothing remains

In this regard you could criticize government, as small business owner will no longer be able to operate. Many have already pointed out that launching any startup will also be difficult for them in future.

However I cannot entirely dismiss this move by the Brazilian govt. Since crypto exchanges are required to maintain capital of over $7 million. Fragile company with less capital will inevitably have to shut down their operation. So it is beneficial for general consumer and legit larger company. Investor confidence in large company will also increase cause they will not suddenly go bankrupt.

With fewer companies in the market, it will be easier for government to keep them under strict supervision. Given that money laundering is major issue in Brazil, strict oversight will help curb such activities.