BC puts cryptoassets and AI as priorities in 2024 – 03/04/2024 – Market

The regulation of cryptoassets and monitoring the use of AI (artificial intelligence) are on the list of priorities for the Central Bank’s regulatory area for this year, director Otavio Damaso said this Monday (4).

According to Damaso, the BC is gathering information collected in a public consultation launched at the end of last year to continue regulating virtual asset service providers.

Within the scope of exchange rate regulation, the head of the BC Prudential and Exchange Regulation department, Ricardo Moura, said that the idea is to establish how cryptoactives can be used to transfer resources.

“Our idea in this sense is that you can use virtual assets to carry out cross-border operations in the same way that you use currency. You have to have an institution authorized to operate in exchange, see how you will authorize these institutions and what type of operation will be carried out “, he stated.

Regarding the topic of artificial intelligence, the BC Regulation director highlighted that the use of technology has been hotly debated in all economic segments and needs to be closely monitored.

“It’s an agenda that we have been following very closely, both from the perspective of the use of artificial intelligence in processes, which on the one hand can impose significant gains in efficiency, but we also always look at it from the prudential aspect”, he said.

“In the prudential case, both internally in the processes of financial institutions, but also in the use of artificial intelligence for other purposes, and also how this affects this entire agenda that we have been fighting against fraud in the financial system,” he added.

This year, the BC’s idea is to study the risks and impacts of the use of AI by financial institutions, such as conduct risk and model risk.

The monetary authority’s agenda for 2024 also includes the regulation of some aspects of foreign exchange law, such as portfolio investment and the interbank foreign exchange market, and Banking as a Service – a model that allows companies in any segment to offer financial services.

When commenting on this new initiative, Damaso said that the BC sees the need to “better understand, identify and provide regulations to specify the limits and also the interactions between regulated entities and service providers for the financial system.”

According to Renato Uema, deputy head of the Financial System Regulation department, there is no expectation of issuing the Banking as a Service regulation itself, as it is a very recent topic.

“We are now in a phase of studies, the best regulatory way and all the legal aspects that would involve this new service provision relationship for the financial system”, he stated.

Regarding the regulation of exchange rate law, Moura said that the big message is to “increase rationalization”, giving greater fluidity and simplification to processes.

Advances in cooperative norms and studies on the need for regulation in the processes of issuing and trading tokenized (digital) assets are still on the monetary authority’s radar.

Damaso avoided giving deadlines, highlighting that deliveries in the area could be impacted by the mobilization of BC employees, which has been going on since last year. Among the demands of civil servants are salary adjustments and career restructuring measures.

“This agenda is an attempt, we are going through a movement by BC employees, which could at some point impact deliveries that are mainly scheduled for 2024,” he stated.