Cryptocurrency Payments, Entering Brazil
Compilation of the original text: Bai Ze Research Institute
Compilation of the original text: Bai Ze Research Institute
Brazil didn’t make bitcoin a legal tender, but it did the next best thing: it passed a law legalizing cryptocurrencies as a means of payment nationwide, boosting digital currency adoption and ecology System expansion.
Yesterday, Brazil’s House of Representatives approved a regulatory framework to legalize cryptocurrencies as a means of payment in the country.
Act PL 4401/2021 provides for the inclusion of cryptocurrencies and airline passenger rewards ("miles") within the definition of "payment agreement", under the supervision of the Central Bank of Brazil.
Already approved and only requiring the president's signature to become law, the bill gives legal status to payments for goods and services in cryptocurrencies — but not legal tender.
Brazil has made strides in cryptocurrency regulation and investor protection. It currently has the largest number of cryptocurrency ETFs in Latin America, and most major banks and brokers in the country currently offer some type of cryptocurrency investing or similar services, such as custody or token offerings. Even Itaú, one of Brazil’s largest private banks, is working on tokenizing assets as part of its future offerings to investors.
Once the bill comes into effect, it will be up to the executive branch of the government (the president and his ministers) to identify the agency or office responsible for overseeing cryptocurrencies — the Central Bank of Brazil (BCB) is expected to be in charge when Bitcoin is used as payment, and the Central Bank of Brazil (BCB) when it is used as an investment. When it comes to assets, Brazil’s Securities and Exchange Commission (CVM) will be the regulator.
In addition, the bill also stipulates the rules for the operation of cryptocurrency trading platforms, as well as the custody and management services of cryptocurrencies by trusted third parties.
Trading platforms need to comply with specific rules in order to do business in Brazil; the bill will regulate the establishment and operation of Bitcoin service providers in Brazil, defining such entities as those that offer the trading, transfer, custody, management or sale of cryptocurrencies on behalf of third parties . Cryptocurrency service providers can only operate in Brazil with explicit authorization from the government.
One of the most important provisions of the bill is that cryptocurrency service providers are obliged to keep their funds separate from those of their clients, in order to prevent a situation similar to that of FTX, where the FTX trading platform used its clients’ funds for its own financial operations. But the rule was ultimately rejected in a vote.
According to the "Notice on Further Preventing and Dealing with the Risk of Hype in Virtual Currency Transactions" issued by the central bank and other departments, the content of this article is only for information sharing, and does not promote or endorse any operation and investment behavior. Participate in any illegal financial practice.
risk warning:
According to the "Notice on Further Preventing and Dealing with the Risk of Hype in Virtual Currency Transactions" issued by the central bank and other departments, the content of this article is only for information sharing, and does not promote or endorse any operation and investment behavior. Participate in any illegal financial practice.
