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The new measures aim to strengthen the central bank’s AML/TF oversight over digital asset transactions where wallets are under complete user control, a situation that the bank says “can reduce the availability of information for monitoring and risk assessment purposes.”
Key Takeaways
- Res 588 requires VASPs to report self-custody transfers over $10K, potentially mapping private holdings.
- Res 589 bans operations with unauthorized crypto providers, closing the market to unregulated parties.
- Taking effect Oct 1, 2026, the strict rules are consolidating the market, with only 5 VASPs applying.
Central Bank of Brazil Eyes Self-Custody Wallets In New Resolution
The Central Bank of Brazil has issued a new resolution to deepen oversight of self-custody wallets and the funds Brazilian users keep under their direct control.
On Wednesday, the Central Bank of Brazil issued Resolutions 588 and 589, which collectively amend previous rules on applying anti-money laundering and terrorism financing (AML/TF) controls, strengthen reporting requirements for virtual asset service providers (VASPs), and close the Brazilian crypto system to unauthorized service providers.
Resolution 588 requires institutions authorized to operate by the central bank to report operations “relating to transfers of virtual assets to or from self-custodial portfolios of a value equal to or greater than the equivalent of US$10,000.00.”
The institution highlighted that the measure was directed to strengthen the oversight of self-custody wallets, which are controlled by users rather than VASPs—a situation that it said can “reduce the availability of information for monitoring and risk assessment purposes, unlike cases in which assets are held in custody in an institution authorized by the Central Bank.”
The data will be submitted to the national money laundering watchdog, the Council for Financial Activities Control (COAF), which could then organize these transactions and potentially create a self-custody database for these addresses, mapping the holdings of Brazilian users leveraging authorized centralized exchanges.
Resolution 589 establishes a tight framework for information sharing and closes the regulated Brazilian crypto system to unauthorized parties, as it establishes a ban on operations “that have as counterparties institutions or entities that provide virtual asset services and are not authorized to operate in the country.”
These changes will become effective on October 1, 2026, when the deadline for VASPs to obtain authorization to operate in Brazil expires. The increased compliance burden and capital requirements have already affected operations: only 5 VASPs have applied for a license to operate, hinting at a major consolidation in Brazil’s crypto industry.
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