A measure legalising and regulating Bitcoin (BTC) and other cryptocurrencies as a form of payment in Brazil has been signed by Jair Bolsonaro, the country’s president.
According to the federal government’s official journal, Bolsonaro signed a measure into Law that established the nation’s official and comprehensive framework for the trade and usage of “virtual currencies” in Brazil. The legislation was signed on Wednesday and made public on Thursday after being previously approved by Congress.
It claimed that
“A digital representation of value is deemed to be a virtual asset for the purposes of this Law if it may be exchanged or transferred electronically and used to make payments or for investment purposes.”
National and international currencies, electronic currencies, tools that offer particular advantages and services (such as points and prizes from loyalty programs), stocks, and financial assets are all excluded from this.
Virtual asset providers (VASPs) are defined as organisations that carry out at least one of the following activities on behalf of third parties. The activities are given below;
The first is the exchange between virtual assets and local or foreign currency or between one or more virtual assets; the transfer of virtual assets. Second is the custody or administration of virtual assets or of instruments that enable control over these assets. And third is the participation in financial services and provision of services associated with an issuer or as an offer.
The paper further mentions,
“Only with previous approval from a federal public administration agency or institution are virtual asset service providers permitted to operate in the nation.”
Its citizens will not accept crypto assets as legal money in Brazil. The measure stipulated that anyone who engages in illicit activities with cryptocurrency would be subject to fines and sentences of up to eight years in jail.
It continued, “If the offences listed in this Law are committed frequently, through a criminal organisation, or through the use of virtual assets, the penalty will be doubled from 1/3 (one-third) to 2/3 (two-thirds).
The new Law will become effective 180 days after it is formally published.
Both the Central Bank of Brazil (BCB) and the Securities and Exchange Commission (known as the CVM) are anticipated to collaborate on market supervision.
But, they will play different roles: the BCB will concentrate on cryptocurrencies used for payments, while the CVM will monitor cryptocurrencies used as investment assets. However, the agencies of government that would serve as watchdogs have yet to be chosen.
As was previously reported in December, the Central Bank of Brazil “issued a resolution” that established an “interdepartmental working group” with a tokenisation objective. About the “registration, custody, trading, and settlement operations of financial assets that employ blockchain-powered technology,” this committee would “eventually recommend regulatory reforms.”
The group will write a “final report,” which will be delivered to the bank’s Governance, Risks and Controls Committee after its meeting schedule is complete in 2023.
The CVM had previously been eager to adopt a laissez-faire approach toward crypto regulation but has since altered this position and wants to start policing the industry. However, the BCB is not exactly crypto-friendly.