Brazil central bank now follows IMF for crypto classification

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Brazil’s Central Bank, the Banco Central do Brasil, has announced that it now classifies traded cryptocurrencies as assets. In a press release published August 26 looking at external sector statistics, the regulator revealed that the move was in accordance with guidelines issued by the International Monetary Fund (IMF).

The Brazilian cryptocurrency industry has for a long time operated under ambiguous regulatory policies, with regulators yet to come up with any concrete regulations to govern the industry. This has led to uncertainty and a series of rows between banks and crypto businesses. These rows, many of which have ended up in court have arisen from some banks’ decision to deny banking services to crypto businesses.

With the new classification, the central bank intends to shed some light on the legality of cryptos in the country. Being classified as goods means that cryptos are now eligible to be used as a payment method.

The central bank stated that it based the classification on a report by the IMF titled ‘Treatment of Crypto Assets in Macroeconomic Statistics.’ Part of the report states, “Crypto assets are considered economic assets because the institutional units holding them can be identified and they derive economic benefits to the holder in terms of holding gains/losses and other benefits. They have monetary value and their price is determined by the market in which they trade.”

The central bank will also treat crypto mining like as a productive process. Further, since Brazil is a net importer of cryptos, the industry shall contribute to reduce the trade surplus. The regulator stated:

Because they are digital, the customs department has no record, but purchases and sales by residents in Brazil involve the execution of foreign exchange contracts. The export and import statistics of goods therefore include the purchase and sale of crypto products. Brazil has been a net importer of cryptos, which has contributed to reduce the trade surplus in the balance of payments goods account.

Brazil has been a crypto and blockchain beacon in the South American region. Blockchain technology has been applied to various sectors of the country’s economy including real estate and agriculture. Brazil also grabbed the headlines earlier this year when it made it mandatory for new diplomats to have knowledge on blockchain and cryptos.