Brazil Endorses Crypto as a Mode of Payment Under Central Bank’s Supervision
Brazil has not classified Bitcoin as legal cash, but it has taken the next right choice: it has legalized cryptos as a method of payment across the nation, providing a legislative lift to the use of cryptocurrencies and the growth of the environment.
In Brazil, the Chamber of Deputies has established a regulatory infrastructure that authorizes the utilization of cryptocurrencies as a form of payment. The agreement, issued under the code PL 4401/2021, includes digital currencies and regular flyer incentives from airlines (the popular “miles”) underneath the category of “payment arrangements” supervised by the Central Bank.
The legislation, which has already been adopted and needs just the assent of the President of the Republic to be implemented, provides cryptocurrency payments for goods and services of legal standing but does not make them legal cash.
Brazil has made significant strides in terms of bitcoin legislation and investor acceptance. It is presently the nation with the most cryptocurrency exchange-traded funds (ETFs) in Latin America, and the majority of the country’s largest banks and brokers provide accessibility to cryptocurrency assets or related services, such as custodial and token launches. Even Ita, one of the biggest private banks in Brazil, is aiming to tokenize assets as a portion of its future suite of investor offerings.
Only crypto tokens classified as securities decline within the authority of the CVM, Brazil’s counterpart to the SEC.
Until present, the governmental entities with the highest involvement in the field were the Central Bank of the nation and the CVM. In addition, the legislation specifies guidelines for the functioning of cryptocurrency trading sites and also custodian and administrative services provided by reputable third parties.
The legislation includes no mention of any provisions for the issue of a central bank digital currency, yet substantial work has already been achieved in this area.
As a means of preventing a scenario identical to FTX, where the cryptocurrency exchange utilized customer assets for its native financial activities, among the essential components of the rule is the need for service providers to keep their funds distinct from those of their customers.
The bill omitted a clause offering tax incentives to crypto miners and acknowledged that the untraceable characteristics of cryptocurrencies enabled illegal conduct, asking for “tighter oversight” of the sector.