Outgoing Brazilian President Jair Bolsonaro has appended his signature to a bill seeking to legalize virtual currencies as a means of payment in the country.
Bolsonaro signed the bill into law after it surmounted the legislative hurdles from the Brazilian Chamber of Deputies. The Chamber of Deputies forwarded the bill to Bolsonaro’s desk at the end of November, and within a month, the outgoing president gave executive assent to the proposed legislation.
The bill clarifies that virtual currencies will not be accorded legal tender status like BTC in El Salvador. However, citizens will be allowed to make payments using the asset class, given the inclusion in the list of authorized payment methods.
The new law criminalizes digital asset fraud and imposes stiff penalties for offenders while providing a licensing regime for firms operating in the industry. Although the law was silent on the agency with regulatory powers over the sector, pundits believe that the Comissão de Valores Mobiliários (CVM), the country’s Securities and Exchange Commission, will be the body in charge.
The securities watchdog is touted as the main regulatory body as Brazilian regulators consider the asset class to be securities. Other legal clauses include steps to take in the face of implosions similar to FTX’s and the clear-cut separation of customers’ assets from service providers.
The law is expected to come into effect 180 days after Bolsonaro’s signing, making June 2023 the tentative date for the launch. This is not the first time the Brazilian parliament has tendered the suggestion for virtual currencies to be used as a payment mechanism. In June, there was a valiant attempt to pass a similar bill.
Brighter days ahead for Brazil’s ecosystem
As power is set to change hands in Brazil, the country’s digital asset enthusiasts are brimming with excitement over the industry’s future. The incoming president Luiz Inacio Lula da Silva, will enter office on New Year’s day and has previously disclosed an affinity for digital assets.
Lula described the underlying blockchain technology as “an innovative and incorruptible technology of records distributed by computers around the world that is also behind Bitcoin.”
The adoption of virtual currencies has been on the rise in Brazil, with recent data revealing that over 12,000 corporate entities have digital assets as part of their balance sheet. Individual holding of the asset class is pegged at over 1.3 million persons, with total holdings said to be in the region of $3.4 billion.
Pundits expect these figures to climb higher despite declining prices as an increasing number of Brazilians choose to store their wealth in stablecoins.
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