Brazil Considers A Law To Enable Bitcoin Payments, Regulate Exchanges
Brazil’s Congress will discuss a bill that would seek to give Bitcoin a legal status as payment currency, regulate companies operating in the cryptocurrency sector and increases penalties for crypto pyramid schemes and other illegal activities.
Brazil’s legislature recently approved the draft of Bill 2.303 / 15, which seeks to regulate digital currencies. The bill was originally introduced by Deputy Expedito Netto. But now Deputy Aureo Ribeiro of the Solidariedade Party has proposed an updated draft that seeks to give Bitcoin legal status as a “payment currency” in the country.
Ribeiro’s bill would replace a proposal initially submitted by Deputy Expedito Netto. Ribeiro has expanded on Netto’s draft and clarified specific, and controversial, topics, including the exemption of “rewards points” from the definition of virtual assets.
At the moment, Bitcoin is unregulated in Brazil and its use in commerce is discouraged. The new law, if passed, would give Bitcoin legal standing in the country for the first time. The bill, however, stops short of calling for Bitcoin to be recognized as “legal tender” (i.e. an official, state-sanctioned currency), though it is unclear how a “payment currency” would be defined by the new law.
A special commission of the Brazilian House of Representatives already approved the bill presented on Sept. 29. If approved by the plenary, the legislation, which was introduced by deputy Aureo Ribeiro, would force virtual asset service providers to follow rules of communication of financial transactions, with identification of customers and record keeping.
“We want to separate the wheat from the chaff, create regulations so that you can transact, know where you are buying, who you are trading with, and have this asset to buy a house, a car, [or] go to McDonald’s to buy a hamburger. It will be a currency in the country just like it is in other countries.”
The bill also would also increase the penalty for money laundering crimes using virtual currencies, including bitcoin.
Currently, the penalty for money laundering in Brazil consists of imprisonment for three to 10 years and a fine, according to the chamber website. If the bill passes, penalties for crypto-related frauds would be four to over 16 years imprisonment, plus a fine.
The law would give companies operating in the sector 180 days to adapt to the new regulations.
The bill comes as a rapidly increasing number of Brazilians are investing in cryptocurrencies and awareness has widened. Director of the Central Bank of Brazil (BCB) João Manoel Pinho de Mello recently said that a significant migration from paper currency to digital means of payment will take place in the next few years. The country’s chief central banker, Roberto Campos Neto, has said his country could be ready for a digital currency in 2022.
Mercado Bitcoin, the largest crypto exchange in Brazil, raised $200 million in a Series B round from the SoftBank Latin America Fund and became the first Brazilian crypto unicorn after it got a $2.1 billion valuation, in July.
Ribeiro’s bill covers companies that enable the exchange between virtual assets and national or foreign currency, or between one or more virtual assets, help with the transfer of virtual assets, or provide custody or administration services for virtual assets or instruments that provide control over virtual assets, among other services.
According to the bill, “only institutions authorized to operate by the Central Bank of Brazil may exclusively provide the service of virtual assets, or accumulate it with other activities.” That will occur within the framework of a regulation issued by an agency or entity chosen by the executive branch of the country, the website text added.
The House of Representatives announced that the proposal must be analyzed at a general session of the lower house, although it did not specify a date on which that debate will take place.
