The Regulatory Landscape around Crypto Assets in South America

Brazil and Chile are pioneers when it comes to the legal regulation of crypto assets. They both seem to align with the view that crypto is a security. Argentina, on the other hand, doesn’t prohibit the use of crypto and doesn’t have any laws in place, though projects are being evaluated. This jurisdiction does, however, tax several activities related to crypto and may penalize people or entities for their use of electricity or seize machinery that was illegally imported if they are involved in crypto.

The case of Peru, though it won’t be explored in this article, is similar to that of Argentina. Bolivia, on the other hand, prohibits the use of crypto assets, and Ecuador did the same until very recently. Uruguay, on the other hand, is evaluating a law that goes against the current of what both Brazil and Chile propose. Instead of defining crypto as a security, it will define crypto as a commodity.

Brazil

On December 21, 2022, then-President Jair Bolsonaro signed Law No. 14,478 of 2022, commonly referred to as Brazil’s Legal Framework for Virtual Assets. The law was published on December 22, 2022, and entered into force on June 20, 2023, following a 180-day transition period.

The law establishes general principles for the provision of virtual asset services in Brazil. These include transparency, sound governance, information security, data protection, consumer protection, operational integrity, and the prevention of money laundering, terrorist financing, and the financing of weapons proliferation.

Under the law, a virtual asset is generally defined as a digital representation of value that may be traded or transferred electronically and used for payment or investment purposes. The definition excludes national and foreign currencies, electronic money, certain loyalty and reward instruments, securities, and other assets whose issuance, trading, or settlement is already governed by specific legislation.

Law No. 14,478 does not make Bitcoin or any other crypto asset legal tender in Brazil. It also does not require businesses or public authorities to accept crypto assets as payment. Private parties may nevertheless agree to settle transactions using crypto assets, subject to applicable contractual, consumer protection, tax, foreign exchange, and regulatory requirements.

Even though it does not give crypto legal tender status (in that way, it differs from current legislation in El Salvador), it does give legal status to payments made with crypto in exchange for goods and services. This opens the door for it to become normalized to pay for food with crypto, or even for government institutions to make payments with crypto. So far, Brazil is a unique country in this way, as the cases that accept crypto as a legal form of payment are few.

The law creates a new category of crime: that of fraud involving virtual assets. To avoid the perpetration of said crime, it is mandated that businesses that deal with crypto assets get a Virtual Service Provider License. If you plan to run your business using crypto in Brazil or have business interests there, this is something you should look into. The experts at Digital Lawyers are here to help if you need to get one.

The main regulatory bodies that will oversee the use of crypto are the CVM (Brazilian Securities Exchange Commission) and the Central Bank for assets that fall into other categories. It is also expected that the RFB (Federal Reserve of Brazil) could be involved in regulating crypto. This is because the Brazilian government considers crypto assets to be securities, not unlike the case made by the SEC in the USA. As a quick recap, the SEC proves that crypto assets are securities by applying the Howey Test.

The fact that Brazil has made the unequivocal decision to consider cryptocurrency securities is significant for the whole continent. This is so because it sets a precedent that other Latin American countries are very likely to emulate.

In case you are new to crypto regulations, the main bone of contention almost always stems from disagreements about what cryptocurrency is in the first place. In fact, the EU, representing the interests of a whole host of countries, was able to more or less resolve this (though not as tidily as one would want), while in the US there are multiple definitions of crypto assets and different ways to prove one or the other in court.

Brazil has dictated that they are securities, and they will be treated as such in that jurisdiction. Many countries, such as Argentina and Uruguay, are currently drafting their own regulations around crypto. To make business matters with Brazil run more smoothly, it is not at all unlikely they will decide to legally define crypto in the same way.

The law leaves the door open for the creation of licenses for exchange platforms, as well as licenses for people who manage crypto on behalf of third parties. Scams, money laundering employing crypto, and virtual fraud will be penalized with 4 to 8 years of prison, as well as a fine in the case of fraud specifically. If the crimes are committed repeatedly, the years spent in prison could go up to 10.

Chile

In Chile, the Fintech Law, as it’s called, started to get implemented on February 3rd, 2023. It was passed into law just a month before. The law adds clarity when it comes to the regulation of crypto assets. In particular, it aims to resolve the conflict between crypto exchanges and traditional banks.

The official name of the Fintech Law is Law Number 21,521. It promotes the Competence and Financial Inclusion through Innovation and Technology in Providing Financial Services. Even though it has already been passed into law, divided perspectives remain inside the regulatory bodies themselves. These divided views have driven businesses to make important decisions like changing their official address and even closing down shop entirely.

The law doesn’t regulate cryptocurrency or crypto assets directly. However, the official text does recognize its use without giving it legal tender status, not unlike Brazil. This provides a solid legal foundation for the setup and development of businesses that deal with crypto, for example, exchange platforms, DeFi, NFT businesses, etc. Regulatory symmetry between both traditional financial institutions and newer fintech businesses is the priority in Chile. It is stipulated that the CMF (Commission for the Financial Market) will oversee crypto operations, including exchanges.

The law also creates an open financial system that will allow the exchange of financial information to get better access to financial services. This means that crypto assets owned by a person or entity could qualify them for credits, among other benefits. The exchange of information between traditional banks and fintech entities will have clear and transparent boundaries and frameworks.

Even though the Chilean Fintech Law doesn’t directly regulate crypto assets, including their exchange in the regulatory framework provides clarity when it comes to rights and obligations. This makes operations easier and gives peace of mind to end users. This law aims to be a catalyst for future legislation to prevent money laundering using crypto assets and other financial crimes, as well as regulations to protect end users. It also aims to provide peace of mind to banks when dealing with crypto through the involvement of the CMF.

Argentina

Cryptocurrency is legal in Argentina, including buying, selling, holding, transferring, and mining crypto assets. Bitcoin and other cryptocurrencies are not legal tender, but individuals and businesses may use them in private transactions. Argentina’s crypto regulation has developed significantly since 2024, particularly for exchanges, custodians, and other virtual asset service providers.

Law No. 27,739 created Argentina’s regulatory framework for Virtual Asset Service Providers, known locally as Proveedores de Servicios de Activos Virtuales or PSAVs. The law appointed the National Securities Commission, or CNV, to maintain and supervise the PSAV registry. The regulated activities include exchanging crypto assets for fiat currency, exchanging one crypto asset for another, transferring virtual assets, providing crypto custody, and offering financial services connected with virtual assets.

In 2025, the CNV adopted General Resolution No. 1058, which introduced detailed rules for crypto exchanges and other PSAVs operating in Argentina. Businesses covered by the regime must register with the CNV and comply with requirements relating to minimum capital, customer disclosures, cybersecurity, internal controls, asset custody, recordkeeping, and the segregation of customer assets. Registered providers are also subject to anti-money laundering obligations, including customer identification, transaction monitoring, risk assessments, and suspicious activity reporting.

Crypto mining is also legal in Argentina and does not generally require registration as a PSAV when the miner is validating transactions for its own account. However, cryptocurrency mining businesses must comply with ordinary corporate, tax, customs, electricity, zoning, and environmental rules. Mining equipment must be lawfully imported, and electricity consumption must be properly declared. Provincial and municipal requirements may also apply, particularly to large-scale crypto mining operations.

Crypto activities are subject to taxation in Argentina. Profits from the sale of cryptocurrency may be subject to income tax, depending on the taxpayer, the source of the income, and the currency in which the transaction is completed. Rewards received from proof-of-work crypto mining are also subject to income tax. Crypto assets held by Argentine taxpayers may additionally be included in the calculation of Personal Assets Tax.

The sale of cryptocurrency itself is generally not subject to value-added tax. However, fees charged by crypto exchanges, brokers, intermediaries, and other service providers may be subject to VAT. Provincial turnover taxes and other local obligations may also apply depending on the activity and location of the business.

Anyone planning to establish a crypto exchange, custody service, brokerage, trading platform, or cryptocurrency mining business in Argentina should obtain legal advice on CNV registration, anti-money laundering compliance, taxation, and local operating requirements. Digital Lawyers can assist with crypto regulation in Argentina, PSAV registration, corporate structuring, and regulatory compliance.

Uruguay

The Congress in Uruguay has already passed a project, which is now being evaluated by the Senate of said country. The main aim of this potential regulation is to provide the BCU (Uruguay’s Central Bank) legal competence to regulate crypto assets and other digital assets.

The text defines crypto assets as digital representations of a value or contractual right that can be stored, transferred, or negotiated electronically through the use of DLT or other similar technologies. Because they are a digital representation of a value, crypto assets can be classed as incorporeal immovable property. In this way, the text is more aligned with USA’s CFTC’s definition of crypto assets as commodities. In this way, Uruguay distinguishes itself from Brazil and Chile, who are more aligned with the American SEC’s definition of what a crypto asset is.

Do you have business interests in any of these jurisdictions? Tell us in the comments!

References

https://es.cointelegraph.com/news/brazils-cryptocurrency-regulation-is-a-step-towards-transparency-and-security-in-transactions

https://www.criptonoticias.com/regulacion/ley-bitcoin-brasil-entrara-vigencia-2023-sancionada-presidente/

https://www.cronista.com/infotechnology/criptomonedas/brasil-otra-vez-le-gano-a-argentina-prepara-una-de-las-leyes-que-mas-piden-aca/

https://www.criptonoticias.com/regulacion/ley-argentina-mineria-bitcoin/

https://decrypt.co/es/120362/importancia-ley-fintech-criptomonedas-chile

https://laley.pe/art/13493/criptomonedas-existe-regulacion-legal-en-el-peru

https://www.cronista.com/infotechnology/finanzas-digitales/otro-reves-que-complica-las-cripto-ahora-ecuador-tambien-las-va-a-regular/