Although Brazil has not defined bitcoin as legal tender, it has: It has passed laws legalizing cryptocurrencies as legal tender throughout the country, tightening regulation on the adoption of digital currencies, and expanding the ecosystem.
The Brazilian House of Representatives has approved a regulatory framework that legalizes the use of cryptocurrencies as a means of payment in the country.
This document, coded PL 4401/2021, is being overseen by the country’s central bank to include virtual currency and airline frequent flyer awards (commonly known as “miles”) in the definition of “payment agreement”. .
Already approved and requiring only the signature of the President of the Republic for promulgation, the law gives legal status to payments in cryptocurrency for goods and services, but not the status of fiat currency.
Brazil has made significant progress in regulating and accepting cryptocurrencies among investors. It is currently the country with the most cryptocurrency ETF holdings in Latin America and most of the major banks and brokers in the country are currently involved in some form of cryptocurrency investment and similar services such as holding and staking of tokens. Even Itaú, one of the largest private banks in Brazil, is working on the tokenization of its assets as part of its future investor package.
Once the law is passed, the executive branch (the president and his ministers) determines the agency or office that will oversee matters. Only tokens classified as securities fall under the jurisdiction of the CVM. , the equivalent of the Brazilian SEC.
To date, the government agencies most involved in this matter have been their national central banks and CVMs. In addition, the law establishes the rules for the operation of cryptocurrency exchange platforms, services for the storage and storage of cryptocurrencies by trusted third parties.
The law does not mention the issuance of digital currency by the central bank. However, the country has already made significant progress in this area.
One of the most important aspects of regulation is the obligation of service providers to separate funds from client funds to prevent FTX-like situations where exchanges use client funds for their own treasury. operation. .
The law circumvented provisions that would give tax breaks to cryptocurrency miners, acknowledged that digital currencies facilitate criminal activity due to their pseudonymous nature, and called for “more scrutiny” of the industry.