Jair Bolsonaro, the president of Brazil, signed a bill that legalizes and regulates Bitcoin (BTC) and other cryptocurrencies as a payment option in the country.
Bolsonaro signed a bill that established the country’s official and complete framework for the trade and use of “virtual currencies” in Brazil, according to the federal government’s official journal. The bill, previously approved by Congress, was signed on Wednesday and published on Thursday.
stated that,
“For the purposes of this Law, a digital representation of value that can be traded or transferred electronically and used to make payments or for investment purposes is considered a virtual asset”.
Therefore, it does not include domestic and foreign currencies, electronic currencies, instruments that provide certain benefits and services (such as points and loyalty program rewards), securities and financial assets.
Virtual asset providers (VASPs) are defined as entities that perform, on behalf of third parties, at least one of these services: exchange between virtual assets and national or foreign currency, or between one or more virtual assets; transfer of virtual assets; custody or administration of virtual assets or instruments that allow the control of these assets; and engaging in financial services and offering services relating to the offering by an issuer or the sale of virtual assets.
The document added that
“Virtual asset service providers can only operate in the country with prior authorization from a federal public administration body or entity.”
Residents of Brazil will not be able to use crypto assets as legal tender in the country.
When it comes to illegal acts involving cryptocurrencies, the bill stated that perpetrators would be punished with fines and up to eight years in prison.
“The penalty will be increased from 1/3 (one third) to 2/3 (two thirds) if the crimes provided for in this Law are committed repeatedly, through criminal organization or through the use of virtual goods”, he added.
The new law will enter into force in 180 days from the date of its official publication.
O Brazilian central bank (BCB) and the Security and Exchange Commission (known as the CVM) should work together on market oversight, but with distinct roles: the BCB would focus on cryptocurrencies used for payments, while the CVM would keep an eye on cryptocurrencies used as investment assets. However, the government bodies that would act as supervisors have yet to be selected.
As reported in early December, the Central Bank of Brazil “published a resolution” that created an “interdepartmental working group” focused on tokenization. That group “will eventually propose regulatory changes” regarding “registration, custody, trading and settlement activities of financial assets that use blockchain-based technology.”
Upon completing its program of meetings in 2023, the group will prepare a “final report”, which will be presented to the bank’s board of directors. Governance, Risks and Controls Committee🇧🇷
While the BCB is not exactly cryptocurrency friendly, the CVM was previously interested in adopting a laissez-faire attitude towards cryptocurrency regulation, but in recent months it has reversed that policy – and instead wants to start policing the sector.
Increased adoption of Bitcoin in LATAM
Alex Adelman, CEO and Co-Founder of Bitcoin Rewards App lollipopsaid in a comment shared with Cryptonews.com This one,
“Brazil’s decision to regulate Bitcoin as a payment mechanism sets the stage for greater adoption of Bitcoin in the country and in Latin America in general.”
According to Adelman, crypto adoption in Latin America continues to rise, rising 40% in 2022. A big part of the reason, the CEO suggests, is inflation, which has grown in this region at its fastest pace in over 15 years in an average of about 19%. Argentina and Venezuela have seen many of their citizens turn to crypto as, despite volatility, Bitcoin has risen in value while fiat currencies in these countries continue to devalue.
Adelman argued that “inflation is a key factor driving demand for crypto as a payment in Brazil. […] Countries with significantly higher inflation than Brazil have an equal, if not greater, potential to benefit from Bitcoin as an anti-inflationary, decentralized store of value.”
The CEO explained that Brazilian inflation was just over 6%, while more than 100 countries in the world are experiencing much higher inflation than that.
Therefore, Brazil’s neighboring countries may decide to follow its lead, with Adelman saying that,
“As one of the world’s largest economies and a trading leader in Latin America, Brazil’s use of Bitcoin as a store of value and medium of exchange also suggests that neighboring economies will soon adopt similar laws to facilitate international trade. 🇧🇷
He argued that countries with large unbanked populations would benefit from using Bitcoin to eliminate reliance on banks, as anyone with an internet connection would have access to financial resources. “In 2023, we will continue to see more countries with high inflation in Latin America and beyond adopt Bitcoin for payments and as a currency,” concluded Adelman.
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To know more:
– Brazilian Government Wants to Police Cryptocurrencies and Train Promoters to Deal with Scams
– New regulations won’t stifle Brazil’s crypto progress, says regulator
– Eighth largest city in Brazil approves plan to allow residents to pay taxes in crypto
– Record Number of Brazilian Companies Holding Cryptocurrencies – Bitcoin and Tether Lead Adoption
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