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Brazil’s Senate’s Economic Affairs Committee (CAE) has released an official report stating that it has approved a bill endorsing the regulation of BTC and crypto markets across the South American nation.
What does the Bill Entail?
With this move, Brazil is steadily on the road to adopting cryptocurrency on a wider scale. The bill paves the way for residents of Brazil to invest in Bitcoin and other digital assets. It also facilitates their use in everyday transactions.
Effective regulation is essential in driving adoption forward in the crypto industry, especially if digital assets must be presented as daily tools. Brazil’s new bill attempts to impose a form of structure on Bitcoin service providers such as exchanges, wallet companies, payment services, and others. Only after the federal government grants each of them permission to provide their respective services, will they be able to resume operation.
Furthermore, the bill moves to ensure that crypto businesses will stay in line. This means businesses working outside of the nation’s financial framework will be legally liable. Additionally, companies have to alert Brazil’s authority over transactions of potentially fraudulent activities. One such activity is spelled out in the bill, with prison time that stretches across 4 to 8 years alongside a fine.
Brazil’s crypto bill also extends its reach to the mining industry within the nation’s borders. It eliminates import taxes for companies that provide crypto miners with all kinds of equipment for operation. As a result, Brazil’s new measures are expected to encourage growth within the industry. In recent times, crypto users and critics alike have clamored for a shift to sustainable energy sources. PL 3825/19 echoes this sentiment by only providing tax incentives to carbon-neutral companies that use renewable energy.
What is Next Following Approval?
Working alongside the Central bank of Brazil, the Securities Exchange Commission (CVM), and the Federal Tax Authority (RFB), Senator Flavio Arns drafted the bill in 2019 before presenting it to the CAE where it was met with unanimous approval.
The bill requires the Brazilian SEC to take a hands-off approach with all sectors in the country’s crypto space. However, ICOs (Initial Coin Offerings) are still open for supervision. Senator Arns suggests that the Brazilian Central Bank and the tax authority work side-by-side to oversee crypto-related operations.
According to a Bloomberg release, Senator Iraja Abreu who functioned as the committee’s spokesman shared that he believes the central bank will be the regulatory entity for crypto-affiliated companies. This is despite the bill’s calls for an institution to oversee regulation. Abreu is also confident the developments could fast-track crypto adoption in the country:
With regulation, cryptocurrency will become even more popular. Once this regulation is approved, the trend is that it will be increasingly adopted in the supermarket, in commerce, in a car dealership.”
At the moment, the bill is on its way to the Senate floor where the senate plenary can vote on it. The bill will afterward proceed to the Brazilian Chamber of deputies which will do the same. PL 3825/19 scaled through the Economic Affairs Committee which vetoed 2 similar bills at the time of its presentation. If it makes it past the next 2 hurdles, President Jair Bolsonaro will face the decision of passing the bill, thus making it into law.