Brazil Legalizes Crypto Payments, ‘Paving the Way for Greater Bitcoin Adoption’

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Source: Adobe/simonmayer

Jair Bolsonaro, the President of Brazil, has signed a bill that legalizes and regulates Bitcoin (BTC) and other cryptocurrencies as a payment option in the country.

Bolsonaro has signed a bill that establishes the country’s official and comprehensive framework for trading and using “virtual currencies” in Brazil, according to the federal government’s official gazette. The bill, previously approved by Congress, was signed into law on Wednesday and published on Thursday.

He stated that,

“For the purposes of this Act, a digital representation of value that can be exchanged or transferred electronically and used to make payments or for investment purposes is considered a virtual asset.”

It therefore does not include domestic and foreign currencies, electronic currencies, instruments that provide certain benefits and services (such as points and loyalty program rewards), securities and financial assets.

Virtual Asset Providers (VASPs) are defined as entities that perform, on behalf of third parties, at least one of these services: exchange between virtual assets and national or foreign currency, or between one or more virtual assets; transfer of virtual assets; custody or administration of virtual assets or instruments to control such assets; and participation in financial services and the provision of services related to an issuer’s offering or sale of virtual assets.

The document adds that,

“Virtual asset service providers may only operate in the country with the prior authorization of a federal public administration agency or entity.”

Residents of Brazil will not be able to use crypto-assets as legal tender in the country.

Regarding illegal acts involving cryptography, the bill stipulated that perpetrators would be punished with costs and up to eight years in prison.

“The penalty will be increased from 1/3 (one third) to 2/3 (two thirds) if the crimes defined in this law are committed repeatedly, through a criminal organization or through the use of assets virtual,” he added.

The new law will enter into force in 180 days from the date of its official publication.

The Central Bank of Brazil (BCB) and the Securities and Exchange Commission (known as CVM) are expected to work together to oversee the market, but with separate roles: the BCB would focus on crypto used for payments, while the CVM would keep an eye on the crypto used as an investment asset. However, the government agencies that would act as supervisors have not yet been selected.

As reported earlier in December, the Central Bank of Brazil “issued a resolution” that created an “interdepartmental working group” focused on tokenization. This group would “possibly propose regulatory changes” regarding “registration, custody, trading and settlement activities of financial assets using blockchain-based technology”.

At the end of its program of meetings in 2023, the group will prepare a “final report”, which will be presented to the bank’s governance, risks and controls committee.

While the BCB isn’t exactly crypto-friendly, the CVM previously wanted to take a laissez-faire attitude to crypto regulation, but has reversed that policy in recent months — and instead wants to start monitor the area.

Increased Adoption of Bitcoin in LATAM

Alex Adelman, CEO and co-founder of Bitcoin Lolli rewards app, said in a comment shared with Cryptonews.com that,

“Brazil’s decision to regulate Bitcoin as a payment mechanism paves the way for greater adoption of Bitcoin in the country and in Latin America as a whole.”

According to Adelman, crypto adoption in Latin America continues to rise, increasing by 40% in 2022. A big part of the reason, according to the CEO, is inflation, which has increased in this region at its pace the faster for more than 15 years on average. about 19%. Argentina and Venezuela have seen many of their citizens turn to crypto as, despite the volatility, bitcoin’s value has risen, while fiat currencies in those countries continue to depreciate.

Adelman argued that “inflation is a key factor driving demand for crypto as a means of payment in Brazil. […] Countries with significantly higher inflation than Brazil have equal, if not greater, potential to benefit from Bitcoin as an anti-inflationary and decentralized store of value. »

The CEO explained that Brazilian inflation stands at just over 6%, while more than 100 countries around the world are experiencing much higher inflation than that.

Therefore, Brazil’s neighboring countries may decide to follow its lead, with Adelman saying that,

“As one of the largest economies in the world and a commercial leader in Latin America, Brazil’s use of Bitcoin as both a store of value and a medium of exchange also suggests that neighboring economies will soon adopt similar laws to facilitate cross-border trade.”

He argued that countries that have large unbanked populations would benefit from using Bitcoin to eliminate dependence on banks because anyone with an internet connection would have access to financial resources. “In 2023, we will continue to see more high inflation countries in Latin America and beyond adopt Bitcoin for payments and as currency,” Adelman concluded.

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Read more: – Brazilian government wants to control crypto and train prosecutors to deal with scams – New regulations won’t stifle crypto progress in Brazil, says regulator

– Brazil’s Eighth Largest City Plans To Allow Residents To Pay Taxes In Crypto – Record Number Of Brazilian Companies Holding Crypto – Adoption Of Bitcoin And Tether Lead

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