Brazil Could Become the Largest Bitcoin Regulator in Latin America

• The two bills presented in parliament will be merged to advance the creation of a coherent regulatory framework.
• In the largest economy in Latin America, the adoption of cryptocurrencies increased 260% in the last year.
• The discussion of the BTC regulatory framework in Brazil comes amid a growing use of cryptocurrencies in the country.

After the unanimous approval in the Economic Affairs Commission (CAE) of the Senate of one of the two bills to regulate the trade of Bitcoin and other cryptocurrencies, Brazil could become the largest regulated market for crypto assets in Latin America.

The proposal presented by Senator Irajá Abreu (PSD-TO) will now go to the Chamber of Deputies where it is expected to be discussed and merged with another bill proposed last year by lawmaker Aureo Ribeiro. Both legislators will meet to agree on the presentation of a single text that reflects the spirit of the two proposals.

The bill approved by the senate on Tuesday was prepared in conjunction with the central bank, the securities commission (CVM) and Brazil’s federal revenue ministry, Globo.com reported.

"Our objective within this regulatory framework is to invigorate the business environment, not suffocate it," said Senator Irajá, an ally of President Bolsonaro in Congress.

It seeks to "create mechanisms that can protect good investors, individuals, legal entities, liberal professionals, self-employed, who see an investment opportunity within a business environment that is obviously conducive”, he assured.

If the two bills manage to merge and be approved by the Brazilian Congress, the promulgation of the law to regulate the cryptocurrency market in the South American country will correspond to the presidency of the republic.

On the Flipside

• President Jair Bolsonaro is not exactly a Bitcoin enthusiast. On several occasions he has stated that he knows nothing about cryptocurrencies.
• There is no certainty that when the law reaches his hands to impose the respective legal sanction, the Brazilian leader will sign it.

According to the approved bill, cryptocurrency companies that are already operating in the country’s financial market will have a period of no less than six months to adapt to the new rules.

Likewise, it provides for the inclusion in the Penal Code of a specific crime for fraud with cryptocurrencies and sanctions for unauthorized operators. The regulation of digital financial services will be administered and directed by the federal government, under the premises of free enterprise and free competition.

The approved text also establishes that users must be guaranteed information security and protection of their personal data by companies that participate in crypto trading. All operations carried out in the virtual asset market will be subject to the rules of the Consumer Protection Code.

Why You Should Care

• The discussion about a definitive and comprehensive regulatory framework for the crypto market in Brazil occurs at a time when the interest of Brazilians in the use of cryptocurrencies is increasing.

The federal tax collector reported that during 2021, Brazilian taxpayers reported a total of 200.7 billion reais in cryptocurrency transactions, slightly more than double the amount recorded the previous year, local press noted.

Additionally, the number of people reporting transactions with digital money has grown. Average monthly users increased from 125,000 in 2020 to 459,000 each month in 2021.