Binance, the largest crypto exchange, has finally settled with Brazilian regulators for $1.76 million over unlicensed derivatives trading allegations. This agreement marks the end of a year-long investigation into the exchange's activities in Brazil.

Regulatory Crackdown

The Brazilian Securities and Exchange Commission (CVM) spearheaded the investigation. In July 2020, the CVM asked Binance to halt its derivatives trading services in the country.

The commission cited that Binance was not authorized to operate as a securities intermediary. The CVM threatened Binance with a daily fine of 1,000 real if it failed to comply.

In August 2023, Binance attempted to resolve the issue with a 2 million real ($370,000) settlement proposal. The CVM found this offer insufficient and rejected it.

After several months of negotiations, Binance submitted a revised proposal on February 15, 2024. Following discussions with the Term of Commitment Committee (CTC), the exchange agreed to pay 9.6 million real ($1.76 million) to the CVM.

"Binance had engaged in the distribution and mediation of securities operations for Brazilian residents without being a member of the securities distribution system or obtaining the necessary registration or exemption from registration with the agency," said the CVM in a statement.

A History of Regulatory Issues

This isn't the first time Binance has faced fines related to regulatory issues. Last month, India's Financial Intelligence Unit (FIU) fined the exchange $2.25 million for not following anti-money laundering regulations.

In May, Canada also fined the company $4.4 million for failing to report transactions over 10,000 CAD and not registering as a foreign money services business (FMSB).

Crypto Adoption in Brazil

Economic turbulence in Brazil, marked by high inflation and a declining currency, has led to a notable increase in cryptocurrency adoption. As the local currency weakens, many Brazilians turn to digital assets to safeguard their finances.

By 2021, around 8% of Brazilians had ventured into crypto investments, making the country the 14th highest in global adoption rates.

Brazil has also advanced significantly in financial inclusion compared to its Latin American peers. The World Bank Global Findex recently reported 70% card usage and a rise in real-time payment systems.

The Brazilian government has supported this trend by introducing the Pix payment system in 2020, a digital platform that has made engaging in crypto transactions easier.

Despite facing regulatory issues, domestic crypto exchanges have continued to grow. With increasing digital literacy and a better understanding of digital finance, more Brazilians see crypto assets as a viable investment alternative.