Brazil approves bill regulating the use of Bitcoin as a means of payment

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2022-12-04 03:12:57

Brazilian lawmakers have approved a complete regulatory framework for cryptocurrencies, regulating the use of bitcoin as a payment method.

In a vote on Tuesday night (November 29) in Brasilia, the country’s capital, the new rules recognize bitcoin as a digital asset that can be used as a means of payment and as an asset. investment in the South American country.

The bill applies widely to the field of “virtual property” and currently only needs the signature of the President of Brazil before it becomes law. However, the bill does not make bitcoin or any other cryptocurrency legal tender in the country.

The bill mandates the executive branch to select government agencies to monitor the market. It is expected that the Central Bank of Brazil (BCB) will be responsible when bitcoin is used as a settlement asset, while the country’s securities and exchange commission (CVM) will be the supervisory authority when Bitcoin is used. used as investment assets. Both the BCB and the CVM, along with the federal tax office (RFB), helped legislators develop the code.

Brazil Approves New Legal Framework for Cryptocurrency

Home to a vibrant crypto economy, at one point Brazil saw a larger number of its citizens trading cryptocurrencies like bitcoin than investing in the stock market. Now the country is looking to set the stage for that to translate into more everyday use in financial transactions.

However, not all points in the text are positive for the development of the cryptocurrency market in Brazil. A major omission of Tuesday’s vote was the rejection of a provision that sought to cut state and federal taxes on bitcoin mining machine purchases. Although the text is quite limited, the benefits will only apply to activities using renewable energy sources that are clearly not enough to receive approval.

Other provisions include regulation of service providers such as exchanges, who will need to comply with specific rules in order to operate in Brazil. The bill seeks to regulate the establishment and operation of Bitcoin service providers in Brazil, identifying such entities as those that provide the exchange, transfer, custody, administration or sale of cryptocurrencies. on behalf of a third party. Cryptocurrency service providers will only be able to operate in the country after being explicitly authorized by the federal government.

On the other hand, a proposed rule would like to require companies operating in the crypto industry to clearly separate their inherited assets from capital owned by their customers –– e.g. bitcoin, people custodian use. The provision seeks to prevent events like the recent FTX, where user funds have been mixed with company funds. While it was intended to help recover user assets in the event of an institution’s bankruptcy, the rule was rejected in a vote.

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