Argentine crypto app Lemon has decided to halt all operations in Brazil and will close around 15,000 local user accounts starting October 16, 2026. The exit was directly triggered by new capital requirements set by Brazilian authorities for virtual asset service provider (PSAV) licensing. Lemon stated that the capital requirements were completely disproportionate to the scale of its local business in the country.
Rather than expending funds to finance the Brazilian license, the company chose a different strategy by reallocating capital to its operations in other Latin American countries. This decision was made just ahead of the deadline for the first phase of Brazil’s PSAV licensing on October 30, 2026. The regulatory framework itself has been in effect since February 2, 2026. Any company continuing to operate without regulatory approval after the licensing deadline will face legal restrictions serving the Brazilian market.
Suspension of Deposits and Card Services
The shutdown process is proceeding in several phases. New deposits in Brazilian real have already been suspended. Meanwhile, the Lemon Card service - a Visa-affiliated card launched in collaboration with Pomelo - will cease processing all transactions starting September 30.
For affected customers, Lemon plans to contact users individually to provide withdrawal assistance before the account closures take effect. Although the account liquidation process is scheduled, no figures have been published regarding the total assets of Brazilian customers held on the platform. The exact capital amount required by regulators for a PSAV license has also not been publicly disclosed.
A Compliance Test for Mid-Sized Players
Lemon’s retreat puts a spotlight on the crypto regulatory climate in South America’s largest nation. In its official statement, Lemon emphasized that the stringent requirements imposed by Brazil ultimately push away players who genuinely want to invest, innovate, and expand service offerings within the crypto sector.
The case impacting tens of thousands of Lemon user accounts serves as a tangible example of the effects of strict licensing standards. Regulatory compliance costs in emerging markets are increasingly sidelining mid-sized players, leaving them with the choice of either absorbing expensive licensing fees or shutting down local operations entirely to preserve capital.
Reported by crypto.news.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
