By Alicia Maher
Brazil has joined the list of some world countries that will officially use cryptocurrencies. Reports from the country have it that Brazil’s Economic Affairs Commission signed a project to regulate the crypto market after meeting with some reps from the central bank and its SEC.
Brazil’s intentions to regulate digital currency use started in 2019 when the bill was first drafted. Fortunately for Brazilian crypto users, the bill has been submitted to the Senate and hopes to pass approval this week. Once approved, it will take effect as soon as possible.
What the Bill Stipulates
The bill will oversee the day-to-day use of cryptocurrencies. It focuses on trading the digital asset class and following strict guidelines, controlling and maintaining customers’ resources, and consumer protection/ safeguarding personal data.
In addition, it has a penalty for organizing, managing, and using virtual currencies for the sole purpose of defrauding individuals. Any individual found guilty will face four to eight years of jail time.
The bill also proposes the dismissal of rates of IPI and Confins on the acquisition of equipment used in mining digital currencies. For this reason, companies will use renewable energy sources to maintain the tools.
The Senate plenary committee will sit to discuss the crypto bill, and if approved, it will go to the Deputies Chamber. Then Brazil’s President, Jair Bolsonaro, passes it into law or veto the bill and sends it to the Parliament. The country will join El Salvador to officially legalize crypto if this happens.
What Happens If the Bill is Passed?
If passed, Brazilians would be able to make payments in cryptos. Recently, Brazil said that the citizens would soon buy McDonald’s using virtual currencies. The privilege of using crypto under the law is being denied in countries like India.
The RBI is a strong non-crypto advocate because he feels that the assets are volatile and could cripple India’s economy. However, the apex bank may legalize crypto as an asset meaning it could be stored like gold, a move that could happen soon, but no assurances are given yet.
Brazil will also acknowledge Virtual Asset Service Providers like Singapore, in which the government will grant licenses to certain crypto firms. Once the company is registered, it would abide by the regulations, including notifying Brazilian authorities of suspected fraud cases.
Brazil has been very receptive to cryptocurrency. Last year, the country acquired over $4 billion worth of digital assets, with investors trading in BTC more than any other digital asset. Instituting a legal framework for cryptocurrencies is the main issue countries face when discussing the adoption of digital assets. It makes sense that some countries are backing out from legalizing the assets.