Brazil’s central bank to launch crypto threat alert system after $140M C&M hack

Brazil’s central bank is preparing a real-time threat alert network linking banks and crypto exchanges, developed with blockchain security firm Hypernative, after a cyberattack on financial infrastructure provider C&M Software saw tens of millions of dollars in stolen funds converted into crypto.

Implementation is expected to begin within weeks, with exchanges including Foxbit and Mercado Bitcoin participating in the rollout.

Brazil crypto regulation shifts from reaction to real-time monitoring

The central bank’s new system is designed around a simple problem: stolen money can move across financial systems much faster than institutions can communicate with one another.

A bank may detect the initial theft, while a cryptocurrency exchange could encounter the proceeds minutes or hours later. Without rapid information sharing, the second institution may have little visibility into what happened upstream.

The planned alert network aims to close that gap by distributing threat intelligence between participating institutions. Alerts generated after a cyber incident could therefore reach other banks and crypto companies before suspicious funds are converted, transferred or withdrawn.

Regina Pedroso, executive director of the Brazilian Tokenization Association (ABToken), told Valor Econômico that the technology had already been tested and that the next challenge was implementation.

“The challenge now is to implement the tool,” Pedroso said, according to the publication, adding that alerts had already been issued and participating associations would need to adapt their systems to receive and distribute them.

That emphasis on implementation is important. The project is not simply another monitoring database. It is intended to create an information-sharing layer connecting different parts of Brazil’s financial ecosystem.

Hypernative specializes in real-time blockchain threat detection and onchain risk monitoring. The company says its platform can screen blockchain addresses and identify risks involving illicit funds, sanctions exposure and attacker-linked wallets.

$140M C&M attack exposed crypto laundering risk

The urgency behind Brazil crypto regulation intensified after the 2025 attack on C&M Software, a technology provider that connects financial institutions to Brazil’s financial infrastructure.

The incident initially emerged as a conventional banking-system compromise, but investigators later found that part of the stolen money had been converted into cryptocurrency.

Estimates of the overall theft have varied, with reports putting the amount at roughly $140 million and some estimates reaching $180 million. Blockchain investigator ZachXBT said between $30 million and $40 million had been converted into Bitcoin, Ether and USDT through exchanges and over-the-counter trading desks.

The case demonstrated why regulators cannot treat traditional banking security and crypto surveillance as separate problems.

Once stolen funds enter a blockchain, investigators can potentially trace their movement across wallets. But identifying the wallets is only one part of the challenge. Exchanges, stablecoin issuers and other service providers must also act quickly enough to prevent the assets from being moved again.

In the C&M case, industry participants helped authorities freeze part of the crypto-linked proceeds. The incident therefore became a real-world example of both the risks and potential benefits of blockchain tracing.

Reuters reported that C&M temporarily halted operations following the attack after the central bank ordered financial institutions to stop accessing its infrastructure as a precaution.

The new alert network is designed to make that type of coordination faster and more systematic.

Brazil crypto regulation adds a 24-hour fraud safeguard

The monitoring system is arriving alongside another major measure under Brazil crypto regulation.

The Central Bank approved Resolution BCB No. 584 on Aug. 7, requiring virtual-asset service providers to apply a 24-hour preventive hold to qualifying transfers above $10,000 destined for foreign crypto-service providers or self-custody wallets. The rule takes effect on Jan. 1, 2027.

The $10,000 threshold can apply to an individual transaction or the aggregate amount moved by a customer during the same day.

Importantly, the measure is described as a preventive retention rather than a permanent freeze. A provider can complete additional risk checks and release the transaction before the 24-hour period expires if the relevant conditions are satisfied. Customers must also be notified when the safeguard is applied, while providers must maintain records of fraud attempts and corrective measures.

The Central Bank specifically pointed to the growing use of virtual assets, including stablecoins, to move proceeds from financial fraud quickly across borders or into self-custodied wallets.

That makes the new rule complementary to the threat-alert network. The alert system focuses on sharing intelligence about attacks and suspicious movements, while the 24-hour retention period gives service providers additional time to investigate potentially risky transfers.

Brazil crypto regulation expands ahead of 2027 framework

The latest measures form part of a much wider regulatory overhaul.

In July, the Central Bank approved Resolution BCB No. 580, placing virtual-asset service providers and prudential conglomerates led by such companies into a regulatory classification that brings them under stronger prudential requirements. The rules covering capital, risk management and disclosure begin applying from Jan. 1, 2027, while virtual-asset service providers are scheduled to be placed in Segment 4 through June 30, 2028.

The Central Bank has also expanded reporting requirements for crypto activity connected to Brazil’s foreign-exchange market. Under Resolution BCB No. 574, institutions authorized to operate in the foreign-exchange market must report specified virtual-asset service transactions beginning Nov. 3, 2026.

Separately, Brazilian authorities have increasingly treated crypto companies as part of the regulated financial ecosystem. A February 2026 Monetary Council resolution brought virtual-asset service providers within the scope of Brazil’s financial-secrecy law, further integrating the sector into the country’s financial regulatory architecture.

The direction is clear: Brazil is not attempting to shut down cryptocurrency markets. Instead, Brazil crypto regulation is increasingly focused on making exchanges, banks and other financial intermediaries capable of detecting, reporting and responding to illicit activity at the speed of digital transactions.

For the new alert network, the immediate test will be whether institutions can move from pilot programs to operational cooperation. If successful, the system could give Brazilian authorities and market participants a faster line of defense when stolen funds cross from traditional finance into crypto.