Main Regulations of Crypto Assets in BRICS Countries

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What is BRICS?

BRICS is the acronym for five regional economies: Brazil, Russia, India, China and South Africa. This term was first used in 2001 by Jim O’Neill (a Goldman Sachs economist) to highlight investment opportunities. In 2011, the BRICS Forum, an intergovernmental organization that focuses on promoting economic and political cooperation among BRICS countries was formed.

Regulation of crypto-assets in BRICS countries 1). Brazil

In December 2022, Brazilian President Jair Bolsonaro approved the Crypto Regulation Bill (but gave crypto service providers until June 2023 to pass it). The bill recognizes crypto assets as a form of payment but does not consider it legal tender. Digital assets considered securities will be regulated by the Brazilian Securities and Exchange Commission (CVM). Virtual service providers must be licensed, and fraud involving digital assets is punishable by a fine and four to eight years in prison.

2). Russia

In July 2022, Russian President Vladimir Putin approved regulations on digital asset transactions. Crypto transactions are legal but they cannot be offered as payment. Operators of digital assets must register with the Bank of Russia, which has the power to maintain registration information and supervise crypto operations. Crypto owners whose transactions exceed $7,757 in a year must report their transactions and wallet balance to tax authorities. Failure to comply with this obligation is punishable by a fine, five years of hard labor or 18 months to 5 years of imprisonment. Investors must take an online test to assess their knowledge of the assets and the associated risks.

3). India

There is no definite regulation on crypto assets by the Indian government. The investment is at the risk of the owner. In March 2023, the Ministry of Finance included the crypto industry in the anti-money laundering rules. Crypto service providers are required to perform user verification and other processes specified in the Money Laundering Prevention Act. Failure to comply results in a fine of $1,220.

4). China

According to the circular issued by the People’s Bank of China and 5 other commissions in 2017, all transactions involving crypto-assets are illegal. This includes operations of crypto exchanges and funding initial coin offerings (ICOs). Financial institutions are prohibited from assisting crypto transactions. Crypto service providers located outside of China but offering services to Chinese residents are also illegal.

5). South Africa

Crypto-assets are treated as financial products but not as legal tender. This means that they can be purchased and offered as payment but not used as official currencies as their adoption is not widespread. In October 2022, the South African government declared that crypto assets were subject to regulation by the Financial Sector Conduct Authority (FSCA). All crypto service providers must be licensed and licensed by the Financial Advisory and Intermediary Service Act (FAIS).

Advertisements for crypto assets make it clear that investing may result in capital loss. All crypto transactions are untaxed. The trade, exchange or holding of crypto-assets is not taxed, only transactions involving the disposal of crypto-assets are taxable.

In the quest for common trade currencies, the BRICS countries are considering the development of a new digital currency backed by commodity assets like gold. This will ensure the stability of its value. The new digital currency will be discussed at the next BRICS summit in August 2023.

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