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Large‐scale ecological restoration programs across the world involve a voluminous demand for native seeds of diverse native plant species. In this article, we explore how institutional systems have operated and impacted native seed supply in Brazil. Native seed supply for restoration is essentially a community‐based activity which faces broad barriers to operating within regulations because of requirements for excessive and costly technical documentation, scarcity of seed laboratories, and lack of instructions for native seed quality testing. Although decentralized seed networks have stimulated arrangements for local organizations to promote seed supply, policies constrain the development of local capacities and the ongoing sustainability of these organizations. These conditions have resulted in a vast network of informal collectors and producers who are largely "invisible" and unknown to the regulatory authorities. Policies have decentralized responsibilities from the state without devolving decision‐making power to the multiple stakeholders engaged in policy elaboration. The policies maintain the centralized regulation of native seed supply. After examining Brazilian seed networks' experiences and conducting discussions with stakeholders and experts, we suggest adapting the current regulations to more local level contexts, encompassing the following strategies: (1) ensuring native seed origin and identity; (2) relaxation of the laboratory accreditation process for native seed quality assurance; (3) fostering seed markets for restoration; (4) research to provide technological innovation; (5) supporting local, diverse, and small seed‐based businesses. [ABSTRACT FROM AUTHOR]