The president of Brazil, Jair Bolsonaro, approved a crypto regulation bill, which was passed by the country’s Chamber of Deputies and the Senate.
Brazil has essentially established a comprehensive framework for the procedure of digital trading assets and legitimizes Bitcoin as a form of payment.
This new law will establish a crime of fraud that involves virtual assets that will feature a penalty of between four to six years in jail, alongside a fine.
Bitcoin, as well as any virtual asset, is now defined as “a digital representation of value that can be negotiated or transferred electronically and used for payments or as an investment."
Additionally, the bill will also lead to the creation of a virtual service provider license, and it will be requested by digital asset companies, including cryptocurrency exchanges or trading intermediaries.
However, aside from these main points, the bill goes much deeper, and as such, we will be going over everything you need to know.
Jumping Deeper Into The Bill for Crypto Regulation in Brazil
One of the key aspects of the bill that stands out is the fact that any digital assets that are considered securities, according to the new regulations, are to be regulated by the Brazilian Securities and Exchange Commission (CVM).
Those that do not fall within this category, which is yet to be determined, will be overseen by another body that will be created at some point in the future.
After this bill was signed into law, companies were given a total of 180 days to adapt to these new rules.
However, this new law does not make Bitcoin (BTC) or any other cryptocurrency legal tender in the country.
This new level of legitimacy given to the usage of Bitcoin's native cryptocurrency, BTC, as well as other cryptocurrencies as a form of payment, will lead to a much higher level of usage of cryptocurrency and greater payment activity within the country as a whole.
There are no guarantees, as the frequency will still be dependent on the actions of the new regulator, which will be in charge, as well as the yet-to-be-created one for those that do not fall under the securities category.
Additionally, the executive branch has the responsibility of selecting the government bodies responsible for overseeing the market fully.
For the time being, the expectation is that the Central Bank of Brazil (BCB) will be in charge when it comes to using Bitcoin as payment, while the country's Securities and Exchange Commission (CVM) will act as the watchdog for the point in time when it gets used as an asset for investments.
Both BCB and CVM, alongside the Federal Tax Authority (RFB), have aided lawmakers in the creation of the overhaul legislation.
Key Takeaway From The Bill
Under this new law, new rules are introduced. These rules view the Bitcoin (BTC) cryptocurrency as a digital representation of value, which can also be used as a form of payment, as well as an investment asset.
This can lead to a spike in the activity of cryptocurrencies as payment options within the country. The extent to which this can happen is yet to be seen. It is important to note that if the BCB gets confirmed as the official watchdog, the outlook might not be what everyone initially expects.
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As for Brazil's new bill, BCB as a regulator, cannot override the definition of virtual assets as they have been determined by the law. However, BCB could potentially push greater adoption for Bitcoin Payments.
President of the Central Bank of Brazil, Roberto Campos Neto has mentioned numerous times that he does not actually see cryptocurrencies as a great alternative to the current FIAT payments due to their high level of volatility. Additionally, the BCB might release its own digital currency that it is currently working on, dubbed "Real Digital," planned for release throughout 2024.
The bill is, however, also advantageous to companies and businesses as a whole, as they can now move towards utilizing cryptocurrency payments as a payment option a lot more closely. This can lead to a much larger adoption of Bitcoin (BTC) as a medium of exchange throughout Brazil, no matter if BCB endorses the coin or not.
Ultimately, according to these new regulations, Bitcoin is considered a digital representation of value, one that can be used in the South American country as a form of payment and even an investment asset.