Brazil forms a committee to regulate cryptocurrency

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With a number of cryptocurrency scandals rocking Brazil, it was not a surprise to see a commission formed to regulate the space. That happened on May 31, when the President of the Chamber of Deputies ordered that such a group be established.

The Chamber of Deputies of Brazil, the lower house of the National Congress of Brazil, had been discussing performing such a commission for some time, and finally approved a proposal that would create regulations to cover digital currencies, especially bitcoin (BTC). The President of the Chamber, Rodrigo Maia, pushed Bill 2303/2015 in the hopes of creating regulation that would significantly change the culture surrounding these digital currencies.

On April 25, Brazilian police arrested a man who was using cryptocurrency to launder money. The man had been part of a drug trafficking network and was accused of operating 25 digital currency mining machines allegedly used in the operation.

A month later, federal police arrested 10 people who were running a scam that had conned 55,000 people out of more than $210 million in bitcoin. The scam operated much like a pyramid scheme.

It is these kinds of fraudulent operations that have led to calls to change the culture surrounding digital currency. Late last week, the head of the Brazilian Association of Crypto and Blockchain (ABCB) had a meeting with several in the upper echelons of the government. Fernando Furlan met with the Attorney General, the head of the Central Bank of Brazil, the head of the Internal Revenue Service, and the head of the Financial Activities Control Council.

The focus of this meeting was on greater recognition by the federal government of the cryptocurrency and blockchain sector. In February, Brazilian banks were forced to allow cryptocurrency exchange to occur after a Brazilian court ruled against the banks. These financial institutions were concerned about the kind of operations that have been exposed by police, yet, Furlan wanted to make it clear that it is the responsibility of the federal government to protect the rights of citizens to trade cryptocurrency.

Not surprisingly, the Internal Revenue Service was already on board, imposing new tax rules related to these digital currencies last month. Now the government as a whole looks to be on board, as regulations and guidelines will likely be in effect soon, maybe even by the end of this year. This is likely to include peer to peer transactions as well.