Brazil Passes Law to Redirect Seized Crypto to Law Enforcement

TLDR

• Brazil’s Law 15.358 allows seized crypto to fund public security efforts.
• Judges can freeze wallets, exchange access, and digital transfers during probes.
• Seized assets may be used before conviction with judicial approval.
• The law targets militias, criminal groups, and encrypted concealment tools.
• Brazil also expands cross-border asset recovery and criminal database coordination.

Brazil has enacted a new law that allows authorities to direct seized cryptoassets into public security spending, expanding the country’s tools against organized crime. President Luiz Inácio Lula da Silva signed Law No. 15.358, which gives judges broader authority to freeze, block, and seize both traditional and digital assets during criminal investigations.

The measure allows the provisional use of seized cryptoassets, with court approval, to support police operations, intelligence work, officer training, and other security activities. The law applies even before a final conviction in certain cases, placing digital assets within the same enforcement framework as other property linked to criminal organizations.

New Powers Cover Wallets, Exchanges, and Digital Transfers

The legislation gives courts the authority to act quickly against crypto-related activity during investigations. Judges may block access to exchanges, digital wallets, and online platforms when prosecutors or police present evidence connecting those tools to organized crime activity.

The law also permits authorities to restrict suspects from moving funds through digital channels, including crypto platforms and payment systems. In cases where assets are clearly tied to illegal activity, courts may authorize liquidation before a final ruling, with proceeds directed to federal and state public security funds.

Brazilian authorities said the law is designed to weaken the financial structure of criminal groups while improving law enforcement’s operational capacity. In a public statement, President Lula said the law creates a path to reach “crime magnates” who continue to operate through wealth and hidden financial networks.

The legislation places strong emphasis on digital finance because criminal groups increasingly use crypto and online payment tools to move money. The law enables investigators to act without prior notice to suspects, a feature that authorities see as central to preventing quick transfers and asset concealment.

Law Broadens Crime Definitions and Raises Penalties

The new framework targets ultraviolent criminal organizations, paramilitary groups, and private militias. It broadens the legal definition of criminal conduct by covering territorial control, obstruction of police work, and the use of privacy tools or encrypted messaging to conceal illegal activity.

Brazil also introduced harsher penalties for offenses linked to organized crime under the same legislation. The law creates new crimes related to structured criminal domination and supporting such activity, with prison sentences ranging from 12 to 40 years, depending on the conduct involved.

Alongside enforcement powers, the law strengthens civil measures that enable courts to seize property, block funds, and sell assets in connection with criminal cases. Authorities may also intervene in companies associated with criminal groups, while group leaders may face placement in maximum-security federal prisons.

The measure also creates a national criminal database designed to connect financial intelligence across agencies. That system is intended to improve coordination among police, prosecutors, and the judiciary by mapping the economic structures used by criminal organizations.

Brazil Builds a Wider Digital Asset Policy Framework

The law arrives as Brazil’s crypto market continues to expand. Industry data cited in recent reporting shows that about 6.5 million people in Brazil were actively investing in digital assets as of February 2026, with stablecoins accounting for most transaction volume.

Authorities have linked that growth to concerns around money laundering, cross-border transfers, scams, ransomware, and organized crime financing. The new framework responds to those concerns through asset seizure rules, transparency measures, stronger KYC and AML enforcement, and more direct international cooperation for intelligence sharing and asset recovery.

Brazil has also been discussing broader crypto policy beyond criminal enforcement. In February 2026, lawmakers reintroduced a bill proposing a Strategic Sovereign Bitcoin Reserve, which, if approved, would gradually build national Bitcoin holdings over five years.

That separate proposal would also allow tax payments in Bitcoin and restrict the sale of Bitcoin seized by judicial order. Together, these developments show Brazil is shaping crypto policy across both law enforcement and financial strategy, while giving authorities new powers to convert seized digital assets into direct support for public security.

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