Brazil's Central Bank Proposes 24-Hour Holds on High-Value Crypto Transfers

The Brazilian central bank has proposed a set of new regulations, including a requirement for virtual asset service providers (VASPs) to impose precautionary holds of up to 24 hours on selected transfers to foreign platforms or to self-custody wallets, aimed at preventing fraud. The Banco Central do Brasil (BCB) confirmed that the obligation shall be applicable to amounts received above $10,000 (roughly Rs. 9.5 lakh), either from a single transaction or the total transactions of the customer in a day. The providers shall also keep all transfers that require additional due diligence. The regulations will come into effect on Jan. 1, 2027.

Central Bank Sets New Fraud Prevention Requirements for Crypto Platforms

As per the BCB, the providers have to inform their clients about holds and maintain logs of fraud events, attempts at fraud, and countermeasures. The VASP can finish the evaluation and authorise a transaction prior to the expiration of the 24 hours only if it follows the guidelines laid out by the central bank. It is one more step taken by Brazil, among many countries, to strengthen the regulation of crypto assets due to scams exploiting their fast and international nature.

The Brazilian decision came on the back of similar initiatives that were taken elsewhere in the wake of efforts by other governments to curb scams. For example, in Japan, the Financial Services Agency and the National Police Agency urged crypto exchanges to limit customer withdrawals when they had deposited fiat money or purchased cryptocurrency. The agencies further requested that crypto platforms require customers to preregister withdrawal addresses and impose a waiting period before newly added addresses can be used. 

Other possible safeguards include the imposition of withdrawal limits by the customer, monitoring, phishing-proof multifactor authentication, and verification of whether the name of the bank remitter matches the crypto owner. Japanese measures are unlike those in Brazil, where the regulatory measure is legally binding. Moreover, the exchange may choose how to implement the safeguard based on its business.

Earlier this month, the UK battled a scam itself when fraudsters started using the identity of financial regulators and cryptocurrency firms in an attempt to defraud customers of crypto firms that have not obtained licenses from the European Union (EU). The report further stated that a member of the French Autorité des Marchés Financiers (AMF), Stéphane Pontoizeau, said there have been instances where fraudsters have posed as AMF officials and asked victims to send their money to them via phishing websites. According to the European Securities and Markets Authority (ESMA), there have been cases where fraudsters have abused the identity and brand image of the authority using fabricated documentation.