On November 28, Brazilian lawmakers voted on a regulatory framework that legalizes the use of cryptocurrencies as a payment method within the country.
The bill covers a broad range of which refers to as «virtual assets,» and now only needs the President’s signature before it becomes law. However, it does not make bitcoin or any cryptocurrency a legal tender in the country.
The bill also states that crypto assets considered securities will be regulated by the Brazilian Securities and Exchange Commission (CVM), while other digital assets will be governed by another body appointed by the executive branch, such as the country’s central bank (BCB).
Both the BCB and the CVM, along with the federal tax authority, helped lawmakers craft the overhaul legislation.
Brazil, which has a thriving cryptocurrency sector, has occasionally seen more people trade cryptocurrencies like bitcoin than invest in stocks. The nation now aims to create the environment for crypto to be more regularly used in financial transactions.
However, not all of the text is helpful for the growth of the country’s crypto market. The rejection of a provision that attempted to reduce some state and federal taxes on purchases of bitcoin mining gear was a big miss in the vote on Tuesday.
The regulation of service providers, such as exchanges, who must adhere to specified criteria in order to operate in Brazil, is one of the additional rules. By defining such organizations as those who provide bitcoin trading, transfer, custody, administration, or selling on behalf of a third party, the law attempts to regulate the establishment and operation of Bitcoin service providers in Brazil. Providers of cryptocurrency services will only be permitted to operate in the country with the official consent of the federal government. One rule tried to require such businesses to clearly separate their own assets and that of their clients, such as when handling bitcoin for clients. The provision aimed to stop situations like the one we just witnessed with FTX, in which user funds were mixed with the business’s cash, and to aid in the recovery of user assets in the event of bankruptcy. It was, however, rejected by the lawmakers.
Before this law was put up for a vote on adoption, Brazil had also seen some meaningful events for crypto this year.
Last month, Nubank, a Brazilian digital bank, announced the launch of its cryptocurrency, “Nucoin,” with the goal of “further democratizing new technologies such as blockchain and web3.”
This year also saw Latin American eCommerce behemoth MercadoLibre launch its cryptocurrency, dubbed MercadoCoin, in Brazil, which customers can use as cash back when purchasing goods on the MercadoLibre eCommerce platform.
Though there are still some miss points and ones that should be reconsidered by the lawmakers as expected by crypto supporters, this is seen as a significant move by the country toward a wider acceptance of digital currencies.