judicial chaos if rejected fintechs file appeals across multiple courts
BC president warns of potential legal chaos if rejected fintechs file appeals across multiple courts without unified jurisprudence. New capital requirements (R$9.2M for payment institutions) will disqualify 63% of 200 payment institutions by end of 2028.
- CorpX fintech won injunction against Central Bank denial; Central Bank expects many similar lawsuits
- New capital requirement: R$9.2 million for payment institutions (up from R$1 million), phased in through end of 2028
- 63% of 200 payment institutions estimated to fall short of new capital requirements
- Organized crime infiltration revealed through hacker attacks and police operations in 2025
- Central Bank lacks sufficient staff and legal tools to liquidate non-compliant institutions
Brazil's Central Bank seeks a unified legal framework from the Supreme Court to prevent a flood of lawsuits from fintechs denied operating licenses due to new capital requirements.
Brazil's Central Bank is bracing for a legal siege. In recent weeks, a fintech called CorpX won an injunction against the bank's decision to deny it an operating license—and the Central Bank's leadership sees this as merely the first of what could be dozens, perhaps hundreds, of similar court battles across the country's judicial system.
Gabriel Galípolo, who heads the Central Bank, has sounded the alarm twice in recent months: once before a congressional committee investigating organized crime in April, and again before the Senate's economic affairs commission in late May. His message was stark. Without a unified legal understanding from Brazil's Supreme Court, the situation could devolve into what he called "judicial chaos."
The root of the problem lies in a regulatory pivot that began last year. In 2020, the Central Bank had loosened its grip on fintech licensing, allowing payment institutions to plug into the Pix system without prior approval from the regulator. The goal was sensible enough: foster competition and innovation in Brazil's financial system. Licenses would be granted gradually over time.
Then reality intervened. A series of hacker attacks on the payment system, combined with police operations like Operation Hidden Carbon, revealed something darker: organized crime had infiltrated fintech companies. Many of these institutions, it became clear, lacked even the minimum capital reserves needed to maintain system security. The Central Bank's permissive approach had created vulnerabilities.
By November 2025, the Central Bank reversed course. It established new minimum capital requirements for payment institutions—jumping from one million reais to 9.2 million reais, to be phased in gradually starting in the second half of this year and fully implemented by the end of 2028. The impact would be severe. The Central Bank estimates that 63 percent of the roughly 200 payment institutions currently operating will fall short of these requirements by the time the rules are fully in effect. Similar pressures apply to other categories of financial technology firms, with more than 80 percent of direct credit societies and microentrepreneur credit societies facing capital shortfalls.
Galípolo has identified two distinct challenges ahead. The first is practical and administrative: the Central Bank lacks sufficient staff and legal tools to remove roughly a hundred payment institutions from the system. The second is legal. As institutions denied licenses begin filing appeals in courts across Brazil's federal system, the absence of a consistent judicial interpretation could create a patchwork of conflicting rulings—some courts ordering the Central Bank to grant licenses, others upholding denials, with no clear resolution.
To address this, Galípolo met with Supreme Court President Edson Fachin in March, bringing along the Federal Police director and the head of Brazil's development bank to discuss the problem. The conversation reflected the seriousness with which the Central Bank views the situation: this is not merely a regulatory matter but a question of financial stability and national security.
The Central Bank's ability to manage the fallout depends partly on resources it does not yet have. It needs approval for a constitutional amendment granting it greater financial autonomy, and it needs a new banking resolution law that would give it clearer authority to intervene in troubled institutions. Without these tools, the bank warns, there may not be enough qualified liquidators in the market to handle the interventions that will inevitably come. Many fintechs are seeking mergers and acquisitions to shore up their capital, but many will not survive the transition. The question now is whether Brazil's courts will allow the Central Bank to manage that transition on its own terms, or whether litigation will force a messier, more chaotic outcome.
Citações Notáveis
If institutions file appeals in various courts without a unified legal understanding, this could become judicial chaos— Gabriel Galípolo, Central Bank president, to Congress
A Conversa do Hearth Outra perspectiva sobre a história
Why did the Central Bank change its mind about letting fintechs operate without licenses?
They didn't change their minds overnight. For years, the looser approach made sense—more competition, more innovation. But then hackers started hitting the payment system, and police operations exposed organized crime inside these companies. The Central Bank realized many fintechs didn't have enough money to actually secure their own systems.
So the new capital requirement is a response to crime, not just regulation?
Exactly. It's both. The crime exposure showed that the old system was porous. But the capital requirement is also about making sure these institutions can actually absorb losses and maintain security. A million reais wasn't enough. Nine million is closer to what's needed.
What happens to the fintechs that can't meet the new standard?
Most of them disappear. The Central Bank estimates 63 percent of payment institutions won't qualify. Some will merge with stronger companies. Others will be liquidated. The ones that were directly involved with organized crime are already being shut down.
And the lawsuits?
That's the real problem. If every rejected fintech files an appeal in a different court, and each court decides differently, the Central Bank loses control of the process. One judge might order them to grant a license. Another might uphold the denial. There's no consistency, no way to manage the transition cleanly.
Is the Supreme Court likely to step in?
That's what the Central Bank is hoping for. They've already met with the Supreme Court president to discuss it. They need a unified legal framework—something that says the Central Bank's authority to set capital requirements is final, and courts shouldn't second-guess it on a case-by-case basis.
What if the Supreme Court doesn't intervene?
Then you get chaos. Dozens of lawsuits, conflicting rulings, institutions operating under injunctions when they shouldn't be, and the Central Bank unable to manage the cleanup it needs to do. The whole point of the new rules is to make the system safer. Litigation undermines that.