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Brazil Central Bank Tightens Cryptocurrency Rules to Curb Fraud and Illicit Payments

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Brazil’s central bank has issued long-awaited regulations for virtual assets and cryptocurrencies, introducing stricter controls aimed at preventing money laundering, fraud, and terrorism financing.

The new framework, which takes effect in February 2026, extends traditional financial-sector safeguards to virtual-asset service providers (VASPs), including brokers, distributors, and exchanges operating in the country.

“New rules will reduce the scope for scams, fraud, and the use of virtual asset markets for money laundering,” said Gilneu Vivan, the bank’s director of regulation, during a press conference in Brasília.

Brazil, Latin America’s largest economy, approved its first legal framework for cryptocurrencies in 2022, but the rollout had been delayed pending regulatory guidance from the central bank. Authorities conducted four public consultations before finalizing the new rules.

Under the regulations, all virtual-asset transactions pegged to fiat currencies — such as the U.S. dollar or the Brazilian real — will be classified as foreign exchange operations. This also applies to international payments or transfers using cryptocurrencies, including those settled via cards or electronic platforms.

Central bank governor Gabriel Galipolo has voiced concerns over the rapid growth of stablecoins, which he said are increasingly being used as informal payment tools, often to bypass tax and oversight systems.

The new framework also mandates stronger governance, transparency, and internal control standards, as well as customer protection and compliance obligations for all crypto-related firms.

Analysts view the move as a major step in Brazil’s effort to bring digital asset markets under tighter regulatory supervision, as crypto adoption continues to expand across Latin America.

Canada Hits Crypto Firm Xeltox with Record C$176.9 Million Fine for Money Laundering

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Canada’s anti-money laundering watchdog FINTRAC has imposed a record C$176.9 million ($126 million) penalty on Xeltox Enterprises Limited, citing the company’s failure to report suspicious transactions linked to child sexual abuse material, fraud, ransomware, and sanctions evasion.

The fine marks the largest enforcement action in FINTRAC’s history, underscoring Ottawa’s growing crackdown on financial crime in the crypto industry.

Xeltox, also known as Cryptomus and previously operating as Certa Payments Limited, is registered as a money services business in British Columbia. The company could not be reached for comment.

“Given that numerous violations in this case were connected to trafficking in child sexual abuse material, fraud, ransomware payments and sanctions evasion, FINTRAC was compelled to take this unprecedented enforcement action,” the agency said in a statement.

FINTRAC said Xeltox repeatedly failed to submit suspicious transaction reports when there were reasonable grounds to suspect links to criminal activity. The firm also did not report receipts of over C$10,000 in virtual currency as required under Canadian law.

The announcement comes amid a broader national push to combat money laundering. Earlier this week, the federal government unveiled plans for a new agency focused on fraud prevention, anti-money laundering efforts, and asset recovery.

Canada will also undergo an audit by the Financial Action Task Force (FATF) next month, a key global body assessing compliance with international standards on financial crime.

Just last month, FINTRAC issued a C$19.6 million penalty against Peken Global Limited, operator of the KuCoin crypto exchange, which had been the largest fine until now. KuCoin has appealed, calling the sanction “excessive and punitive.”

The new penalty against Xeltox signals that Canadian regulators are escalating their enforcement stance, targeting crypto intermediaries that fail to meet anti-money laundering and counter-terrorism financing obligations.

Paxos Trust Settles New York Charges Over Binance-Related Compliance Failures for $48.5 Million

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Paxos Trust agreed to pay $48.5 million to resolve charges brought by New York’s Department of Financial Services (DFS) over its inadequate oversight of illegal activity tied to cryptocurrency exchange Binance. The settlement includes a $26.5 million civil fine and a $22 million commitment to improve Paxos’s compliance program.

The DFS investigation found that Paxos, which partnered with Binance to market and distribute the Binance USD stablecoin, failed to effectively monitor wrongdoing on Binance’s platform. It did not escalate red flags to senior management and had systemic lapses in its anti-money laundering (AML) controls. A review ordered by New York revealed that between July 2017 and November 2022, about $1.6 billion of transactions on Binance’s platform involved illicit actors such as Ponzi schemers and sanctioned darknet marketplace participants. Transactions also involved entities sanctioned by the U.S. Office of Foreign Assets Control.

Following the regulator’s February 2023 order, Paxos ceased issuing Binance’s stablecoin and ended its partnership with the exchange. Paxos stated it had fully addressed the compliance issues, with no harm to customer accounts or consumers.

Binance itself was not a defendant in this New York case but pleaded guilty in November 2023 and agreed to a $4.32 billion criminal penalty for federal anti-money laundering and sanctions violations. Meanwhile, the U.S. Securities and Exchange Commission dropped its civil case against Binance in May 2025, signaling a shift in cryptocurrency regulation during President Donald Trump’s current term.