Brazil Moves to Regulate Local Crypto Market

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Brazil Moves to Regulate Local Crypto Market

Brazil lay the framework for the country’s cryptocurrency market on Tuesday, approving a measure that establishes criteria for virtual assets. The law was unanimously passed by the Brazilian Senate’s Economic Affairs Committee, clearing the way for a vote on the Senate floor, followed by the lower house. If the measure is passed by the National Congress, President Jair Bolsonaro would consider signing it into law.

Key Takeaways

  • Brazilian legislators will vote on legislation to govern the country’s cryptocurrency business.
  • The proposed law defines virtual assets and establishes crypto service providers’ duties.
  • The law intends to encourage crypto usage and reduce digital asset-related criminality.
  • Brazil is still working on creating a digital version of its national money, the Brazilian real.

With the establishment of crypto legislation in Brazil, the region’s biggest nation would join others in establishing clear standards and laws regulating the burgeoning asset class. In September 2021, El Salvador became the first government in the world to accept Bitcoin as legal cash, even offering residents $30 in Bitcoin in exchange for downloading its national digital wallet. Meanwhile, Cuba said last year that government intends to recognize and regulate cryptocurrencies such as Bitcoin, citing “socioeconomic interest.”

What the Bill Covers

The proposed measure begins with the fundamentals, such as identifying virtual assets and detailing the obligations of cryptocurrency service providers. It also recommends that the federal government select whose organization enforces crypto rules, which is anticipated to be the Central Bank of Brazil (BCB), according to the draft’s rapporteur, Senator Iraj√° Abreu.

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According to Abreu, who first submitted the law in 2019, the bill’s successful approval will result in increased use and popularity of cryptocurrencies in the nation. “Once this legislation is authorized, the tendency is for it to be progressively utilized in supermarkets, businesses, and auto dealerships,” he added.

According to TripleA, a fintech blockchain business, 4.9% of Brazilians possess cryptocurrencies.

Focus on Curbing Crypto-Related Crime

Abreu also said that regulatory certainty will aid in the reduction of crypto-related crimes. “The project’s goal is to prevent or limit illicit activities such as money laundering, tax evasion, and a variety of other crimes. There is a licit, legal market, which accounts for the great bulk of this industry, although there are outliers.”

The bill recommends that virtual asset service providers implement anti-money laundering (AML) systems and monitoring to prevent the criminal use and concealment of crypto-assets, as well as jail and penalties for violations of crypto laws. Brazilian officials seized R$172 million ($33 million) in July 2021 in connection with a money-laundering probe involving cryptocurrency exchanges.

In addition to planned crypto laws, Brazil, like numerous other nations, is working to build a central bank digital currency (CBDC) of its native currency, the real. The BCB intends to conduct a trial program later this year before unveiling the full version of the digital real in 2024.

The central bank A central bank issues digital currencies, which are analogous to bitcoin. They are determined by the value of the country’s fiat currency. CBDCs are being developed in several nations, and some have already integrated them into their financial systems.

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