Binance, the world’s largest cryptocurrency exchange, has agreed to a $1.76 million settlement with Brazilian regulators over allegations of unlicensed derivatives trading. This settlement concludes a year-long investigation into the exchange’s operations in Brazil.
Binance’s Derivatives Trading Allegations
The Brazilian Securities and Exchange Commission (CVM) had instructed Binance to cease its derivatives trading services in Brazil starting in July 2020, citing the exchange’s lack of authorization as a securities intermediary. The CVM warned Binance of a daily fine of 1,000 reais if it did not comply.
In August 2023, Binance proposed a settlement of 2 million reais ($370,000), which the CVM deemed insufficient. After further negotiations, Binance submitted a revised proposal on February 15, 2024, and agreed to pay 9.6 million reais ($1.76 million) to the CVM. The CVM confirmed the settlement on Wednesday, noting that Binance had engaged in securities distribution and mediation for Brazilian residents without proper registration or exemption from the agency.
Previous Fines and Ongoing Regulatory Challenges
This settlement adds to Binance’s history of regulatory fines. Last month, India’s Financial Intelligence Unit (FIU) fined the exchange $2.25 million for non-compliance with anti-money laundering regulations. In May, Canada also imposed a $4.4 million fine on Binance for failing to report transactions over 10,000 CAD and for not registering as a Financial Market Services Business (FMSB).
Surge in Crypto Adoption in Brazil
Amid economic challenges in Brazil, including high inflation and a weakening currency, cryptocurrency adoption has surged. By 2021, about 8% of Brazilians had invested in cryptocurrencies, positioning the country as the 14th highest globally in crypto adoption rates. Brazil has also made strides in financial inclusion, with 70% of the population using cards and increased use of real-time payment systems.
The Brazilian government has supported this trend with the introduction of the Pix payment system in 2020, facilitating easier engagement in digital transactions. Despite regulatory hurdles, domestic crypto exchanges continue to expand, driven by rising digital literacy and a growing acceptance of digital finance.