The Chamber of Deputies in Brazil has established a legal framework that would enable individuals to employ cryptocurrency for payments. Digital currencies will now be included in the description of “payment agreements”. It will be controlled by the country’s Central Bank after the document was signed under the statute PL 4401/2021.
Drafted by deputy Auero Ruberio, the measure, which would govern a wide category of financial products known as “virtual assets,” has cleared both chambers of Congress and simply awaits the President’s approval to become law.
However, the measure doesn’t make Bitcoin or other cryptos legal tender. The measure also gives the nation’s executive branch the authority to designate government entities to regulate the market.
Cryptocurrency transactions are likely to be overseen by the Brazilian Central Bank (BCB). Transactions involving investment will be monitored by the Brazilian Securities and Exchange Commission(CVM).
As they crafted the reform legislation, legislators got advice from the federal tax authority, BCB, and the CVM. Crypto exchanges will also become subject to regulation under the new legislation.
The bill’s purpose is to define standards for the licencing and operation of firms in Brazil that allow crypto selling, custody, transfer, or administration on behalf of others. To lawfully operate in the nation, crypto service providers will require approval from the federal government.
Businesses are allowed 180 days to comply with the new laws before they are put into force. The measure also imposes a sentence of two to six years in jail and a fine for fraudulent operations utilising virtual currency.
A significant component of the measure was that crypto service providers must isolate their cash from their consumers. The clause was meant to avoid scenarios like the recent FTX collapse when the exchange diverted customer cash for its activities. However, this suggestion was rejected.