The financial revolution and the risk of money laundering under the new Brazilian Legal Framework
*Per Luiz Felipe Vieira de Siqueira
Technology has the power to transform—it can open doors to greater freedom, autonomy, and innovation. But it can also serve as a shield for illicit practices. This duality is evident in cryptoassets like Bitcoin, which emerged with the aim of decentralizing the financial system, removing the dominance of large banks and state authorities. However, like any disruptive tool, its use depends on who operates it: it can accelerate solutions or facilitate well-hidden fraudulent schemes.
A financial and digital revolution
Bitcoin was created in 2008 by the pseudonymous Satoshi Nakamoto in response to the global financial crisis. The idea was simple and bold: to allow anyone to exchange value with another directly, without the need for banks or intermediary institutions. This proposal was made possible thanks to technology. blockchain, which functions as a huge public and digital ledger where all transactions are recorded and almost impossible to change.
Blockchain has brought real advantages: security, transparency, and decentralization. Transactions are visible to everyone, but user names are replaced by codes—ensuring privacy. However, this same privacy has become a major challenge for governments, tax authorities, and law enforcement: how can they identify who is behind a transaction involving billions, without a clear trail?
Cryptoassets and money laundering
The anonymity of cryptoassets has attracted not only honest investors and technology enthusiasts, but also criminals. It's possible to open multiple digital wallets without any formal identification, hide transactions through mixers, and use exchanges in countries without strict regulations. All of this makes it much more difficult to combat money laundering, tax evasion, terrorist financing, and other economic crimes.
An emblematic example was Operation Kryptos, of the Federal Police, who dismantled a pyramid scheme involving crypto assets that moved more than R$38 billion. All of this occurred within a decentralized, sophisticated structure, far from the scrutiny of regulatory institutions. The case became known as the "Bitcoin Pharaoh."
The Legal Framework for Cryptoassets in Brazil
To address the growing risks associated with cryptoassets—such as fraud, money laundering, and lack of transparency—Brazil took a decisive step in 2022 by approving Law No. 14,478, known as the Cryptoassets Legal Framework. This milestone represents a true paradigm shift in the relationship between financial technology and government regulation.
With the new law, the Central Bank of Brazil takes on a central role as regulator and overseer of the sector, ensuring greater control over companies that operate with digital assets. These companies, known as Virtual Asset Service Providers (VASs), are now legally treated as financial institutions—which increases the responsibility of their managers and subjects their services to more stringent governance and security standards.
The law also broke new ground by classifying cryptocurrency fraud as a crime under Article 171-A of the Penal Code, with penalties ranging from 4 to 8 years in prison. This means that fraudulent behavior such as pyramid schemes and market manipulation now has specific legal provisions and is classified as a serious crime.
Additionally, PSAVs must follow strict compliance rules, such as formal user identification (KYC – Know Your Client), detailed records of transactions, and reporting suspicious activity to COAF (Financial Activities Control Council). These measures aim to increase transparency and hinder the use of cryptoassets for illicit purposes, without stifling the innovation that accompanies this technology.
In other words, the sector now has legal obligations to operate—which is great for those who want to invest safely and with their feet on the ground.
But the challenge remains…
Although the law has been in effect since June 2023, practical regulation is still in progress. The Central Bank opened public consultations and received public input, but has yet to publish all the rules for the Cryptoassets Legal Framework to have legal effect. Once that happens, there will still be a 180-day period for the market and criminals to adapt.
Meanwhile, companies can still operate without official authorization—which keeps the door open for uncontrolled operations.
This slow pace is worrying. Without clear rules, Brazil risks becoming a "crypto asset haven," where criminals launder money, evade international regulation, and exploit loopholes that other countries are already closing.
The role of companies and innovation
In this scenario of accelerated transformation, professionals and companies working in technology, innovation, startups, and financial services need to be especially vigilant. The cryptoasset sector is about to undergo significant changes, and those who prepare in advance will have a strategic advantage. It's not just about complying with regulations, but about building a more trustworthy and sustainable environment for innovation.
The new reality demands a proactive stance: adopting transparent practices focused on customer protection; incorporating efficient compliance and tracking systems that meet legal requirements and strengthen institutional reputation; maintaining ongoing dialogue with regulatory bodies, intelligently adapting business models; and investing in security and traceability technologies capable of preventing risks and ensuring transaction reliability. More than an obligation, this movement represents an opportunity to lead a market seeking maturity and credibility.
Regulation may seem like a brake, but it's what ensures trust. Without it, the entire industry is vulnerable—and the losers are investors, consumers, and honest innovation.
Conclusion
Cryptoassets are one of the great revolutions of our time. But, like any revolution, they require regulations to prevent them from becoming a threat. Brazil has already taken an important step with its new law, but it needs to accelerate the regulatory process, strengthen oversight, and cooperate with international initiatives.
Serious companies have everything to gain from a regulated, predictable, and safe environment. And so do we, as citizens—because innovation without responsibility can be costly.
*Luiz Felipe Vieira de Siqueira is a lawyer and researcher at Think Tank ABES, PhD candidate in Innovation & Technology – PPGIT UFMG and partner at Privacy Point. The opinions expressed in this article do not necessarily reflect the positions of the Association.
Notice: The opinion presented in this article is the responsibility of its author and not of ABES - Brazilian Association of Software Companies
Article originally published on the IT Forum website: https://itforum.com.br/colunas/criptoativos-lavagem-de-dinheiro/
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