• Binance urges Brazil to drop self-custody wallet ban proposal.

• Legal experts say the wallet ban violates Brazilian property rights laws.

• The crypto industry seeks balanced regulations to support growth and safety.

In Brazil, crypto exchanges like Binance are urging the Central Bank to reconsider its proposal to ban self-custody of stablecoins in digital wallets. These businesses feel that the ban is too harsh and could lead to challenges for the burgeoning crypto sector in India. They are not in favor of banning self-custody and instead recommend having a process where people can report while keeping their digital assets.

Binance Proposes Reporting Over Crypto Custody Ban in Brazil

The matter started after the Central Bank of Brazil included the idea of forbidding self-holding of crypto in its public consultation around crypto regulations. As a result, people in the crypto community have been suggesting alternative options. Reporting transactions is one of the most commonly supported ideas. This means companies need to file stablecoin transactions to Brazil’s Financial Activities Control Council (Coaf), among other financial authorities.

One of the world’s biggest crypto brokers, Binance, has made this alternative available. Company officials state that by reporting possible crimes, they can keep users’ identity safe without removing important features in related laws. They believe the Central Bank’s current proposal is too extreme. As a result, businesses may prefer to operate outside Brazil instead. By doing this, we would lessen competition locally and slow down important new developments.

Legal experts are moreover expressing their opposition to the ban. According to Cesar Carvalho of Baptista Luz Advogados, the right to control one’s own property is protected by Brazilian law. He pointed out that forbidding it outright would be against the rules of Brazilian law and democracy. Carvalho believes there are already various tools and rules set up to prevent unlawful activity in the crypto market. For this reason, they focus on money laundering prevention, use the travel rule to pinpoint who a transaction is going to and rely on blockchain analysis tools.

Brazil Crypto Sector Pushes for Balanced Regulation

Guilherme Sacamone, head of OKEx in Brazil, warned that stricter regulations could drive businesses to expand into countries with looser industry controls. He explained that such rules often burden companies that follow the law. In contrast, bad actors can continue operating in the shadows without consequences. Therefore, these regulations may end up punishing the compliant while letting offenders slip through.

The proposal that added an extra step for sending digital assets to wallets not owned by citizens was also questioned by some executives. They believe that this step could change the way assets can be bought and sold by people in different countries. A Brazilian should be able to exchange their money for Bitcoin with anyone in the world at a reasonable price. If wallet transfers are restricted, the basic role of the market and its liquidity may suffer.

One more argument in favor of self-custody is that users can manage their coins outside the control of exchanges. Although it requires more attention, it allows each person to keep their information safe. For this reason, those working in crypto think that self-custody can’t be banned because it’s vital to using cryptocurrencies.

Overall, Brazil’s crypto industry calls for rules that protect people’s money and allow for new developments. A better reporting system in Brazil can guide people toward using the internet safely and responsibly.