Central Bank of Brazil launches regulatory sandbox that will enable approved companies to „test“ their products in the market and Bitcoin and cryptomoedas companies can also submit proposals
Projects involving Bitcoin, crypto-currencies, tokens, cryptoactives, digital assets, stablecoins and other forms of „digital currency“ may be sent to the Central Bank of Brazil and seek authorization in its regulatory sandobox.
The resolutions approved by the Central Bank and the National Monetary Council, CMN, 4,865 and 4,866, and Resolution BCB 29, kicked off the project, which is part of the BC# Agenda in the competitiveness dimension.
The Cointelegraph contacted the Central Bank to find out if there would be any restriction to cryptoactive companies or projects involving cryptomoeda and blockchain.
Initially, according to the Central Bank, there will be no restriction as long as the participants observe all the rules established by the regulator.
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The Central Bank explained that those interested in participating in the Regulatory Sandbox have to develop innovative projects that fall under the legal jurisdiction of the Central Bank or the National Monetary Council (CMN).
This way, institutions that are already part of the regulated universe – the Central Bank and the CMN – or any other constituted company can participate, as long as they present an effectively innovative project in the financial or payments area.
„The Regulatory Sandbox is an environment in which entities are authorized by the Central Bank to test, for a given period, innovative projects in the financial or payment area, observing a specific set of regulatory provisions that support the controlled and delimited realization of their activities,“ explained the Central Bank’s Director of Regulation, Otávio Damaso.
According to the documents published by the Central Bank, one of the objectives of the sandbox is to stimulate innovation and diversity of business models in the National Financial System and the Brazilian Payment System.
It also seeks to increase efficiency and reduce costs in the National Financial System and the Brazilian Payment System and promote competition and financial inclusion.
„Meet the needs of end users, especially freedom of choice, security, protection of their economic interests, transparency in the provision of services and in charging fees, non-discriminatory treatment, privacy and protection of personal data and banking secrecy, access to clear and complete information and appropriate conditions for the supply of products and services,“ the document highlights.
During the testing period, companies are subject to differentiated regulatory requirements and monitoring .
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While the idea is being developed, the Central Bank will have access to the results obtained and will evaluate the risks associated with the new products. If there is any problem, innovation may be limited or even prohibited. On the other hand, if the experiment is successful, large-scale marketing can be released.
„The goal of the CBD Regulatory Sandbox is to enable the entry of innovative business models that add efficiency gains, reach a wider audience and bring more competition to the financial and payment systems in the country,“ said Damaso.
In addition, the Central Bank will be attentive to projects that also preserve the safety and efficiency of these systems.
As of today, the Central Bank will prepare for the establishment of the rules for the first cycle of the project – planned to be launched next year.
„Information on the registration process and more details on the subject will be disclosed in the coming months,“ warned the deputy head of the Financial System Regulation Department (Denor), Paula Ester Farias.
Even so, future applicants to participate in the action headed by the Central Bank must already be certain that they will have to adapt to some requirements,
strict observance of the rules to prevent money laundering and combat the financing of terrorism
compliance with the Central Bank’s regulations on the handling of complaints made by its clients and users
conducting transactions with integrity, reliability, security and confidentiality
in addition to making it clear to its eventual clients that the product/service is developed within the Regulatory Sandbox of the Central Bank.
At the end of the testing cycle accompanied by the Central Bank, participants will have the chance to obtain definitive authorization to operate in the National Financial System (SFN).
„The projects developed may also serve as a basis for improving the regulations of the Central Bank and the CMN,“ concluded the Deputy Chief in Denor.