The Chamber of Deputies of Brazil, has passed a crypto regulation bill that legalizes the use of cryptocurrencies as a payment method.
A law legalizing cryptocurrencies as payment methods across the nation was passed in Brazil, providing a regulatory boost to the uptake of digital currencies and the development of the ecosystem.
A legal framework allowing the use of cryptocurrencies as a form of payment in Brazil was approved by the Chamber of Deputies. The agreement—signed under the designation PL 4401/2021—allows for the inclusion of digital money and frequent flyer miles (commonly referred to as “miles”) in the definition of “payment agreements” subject to the control of the nation’s Central Bank.
The law, which has already been approved and only needs the President of the Republic’s signature to become effective, gives cryptocurrency payments for goods and services legal status, but does not elevate them to the status of legal tender.
Brazil has advanced significantly in terms of investor adoption and regulation of cryptocurrencies. The majority of the country’s major banks and brokers currently offer some type of exposure to cryptocurrency investments or comparable services like custody or token offerings, and it currently has the most cryptocurrency ETFs in Latin America.
Even Ita, one of the biggest private banks in Brazil, is attempting to tokenize assets as a component of its upcoming suite of services for investors. The body or office in charge of overseeing the matter will be decided by the executive branch of the government (the president and its ministers) after the law is put into effect; only tokens classified as securities fall under the purview of the CVM, Brazil’s equivalent of the SEC.
The CVM and the nation’s own Central Bank have been the government organizations most active in the area up until this point. The law also establishes guidelines for how cryptocurrency exchange platforms should run as well as for the custody and management of cryptocurrencies by reputable third parties.
Despite the fact that the law is silent on the subject, the nation has already made significant strides toward the issuance of a central bank digital currency. To avoid a situation similar to FTX, where the exchange used its clients’ funds for its own financial operations, one of the most crucial aspects of the regulation requires service providers to keep their own funds separate from those of their clients.
The law avoided a clause that would have given tax breaks to cryptocurrency miners and called for “closer monitoring” of the sector, acknowledging that the anonymity of digital currencies enabled criminal activity.
