Binance Settles with Brazilian Regulators for $1.76 Million
Cryptocurrency exchange Binance has reached an agreement to pay $1.76 million to Brazilian regulators in order to resolve allegations of unlicensed derivatives trading in the country. This settlement with the Comissão de Valores Mobiliários (CVM), Brazil’s securities authority, brings to a close a year-long investigation into the company’s operations within Brazil.
Regulatory Crackdown
The regulatory scrutiny began in July 2020, when the CVM ordered Binance to halt its unauthorized activities in Brazil and warned the company of a daily fine of 1,000 reais for failing to comply. Despite this warning, Binance continued its operations, which led to further actions from the CVM. The regulator accused the exchange of operating without the necessary authorization, particularly concerning derivatives trading, a sector that has gained popularity in Brazil’s growing cryptocurrency market.
In an effort to resolve the situation, Binance proposed a settlement of $370,000 in August 2023. However, the CVM’s Specialized Federal Attorney’s Office (PFE-CVM) found a legal obstacle to this agreement, citing a lack of sufficient evidence that the alleged violations had stopped. The CVM’s Settlement Committee (CTC) also highlighted the seriousness of the alleged infractions, which included possible obstruction of regulatory oversight, and recommended that the proposal be rejected.
Following this, the CVM dismissed the settlement offer, insisting on a more significant penalty. The regulator later presented Binance with a new settlement proposal in February.
Rising Crypto Adoption in Brazil
The economic difficulties faced by Brazil, including high inflation and a weakening currency, have led to an increase in cryptocurrency adoption. In light of financial instability, many Brazilians have turned to digital assets as a safeguard against the diminishing value of the local currency.
By 2021, around 8% of Brazil’s population had invested in cryptocurrencies, positioning the nation as 14th globally in terms of crypto adoption. The Brazilian government has also taken steps to address this burgeoning trend. The launch of the Pix payment system in 2020, a real-time digital finance platform, has further propelled cryptocurrency adoption by making digital transactions more accessible and widespread.
Despite facing regulatory hurdles, local cryptocurrency exchanges have thrived. The increase in digital literacy and growing familiarity with digital finance have established cryptocurrencies as a viable alternative investment for many in Brazil.
