The governor of Banco Central do Brasil, Brazil’s central bank, said the bank has noted a significant surge in crypto adoption in the country and intends to react by tightening the digital assets regulation. 

During his speech to the parliamentary Finance and Taxation Commission on Sept. 27, Roberto Campos Neto reported the rise of “cryptocurrency imports” by Brazilians. According to the central bank’s data, imports of crypto rose by 44.2% from January to August 2023 when compared with 2022. The total funds were about 35.9 billion Brazilian reals ($7.4 billion).

Related: Brazilian lawmakers seek to add crypto to debtors’ protected assets list

Campos Neto separately emphasized the popularity of stablecoins, which, according to him, are being used more for payments than investments. He said the bank will respond to these tendencies by tightening regulation and bringing crypto platforms under its supervision. He added that problems related to crypto could include tax evasion or illicit activities:

“We understand that a lot is connected to tax evasion or linked to illicit activities.“ 

Brazil handed the primary role in crypto regulation to the Central Bank in June 2023. However, the token projects that qualify as securities continue to fall under the purview of the Comissão de Valores Mobiliários, or CVM — Brazil’s equivalent of the United States Securities and Exchange Commission (SEC).

The Central Bank of Brazil is also working on its own digital currency, Drex. In August, it revealed the brand and logo of its central bank digital currency (CBDC). In a previous controversy, Brazilian blockchain developer Pedro Magalhães reportedly discovered functions in the Drex code that would allow a central authority to freeze funds or reduce balances.