Brazil’s Chamber of Deputies approved a regulatory framework legalising the use of cryptocurrencies as a means of payment in the country, providing a regulatory boost to cryptocurrency adoption.
The new bill, which was passed on Tuesday night in Brasilia, the country’s capital, recognises Bitcoin as a digital representation of value that can be used for payments and investment.
The law, which has already been approved and only needs the signature of the President of the Republic to become law, grants legal status to payments in cryptocurrencies for goods and services.
The legislation covers a wide range of “virtual assets,” but it makes no mention of the issuance of a central bank digital currency, even though the country has already made significant progress in this regard.
After the law is passed, it will be up to the executive branch of government to decide which body or office will oversee the matter.
The bill gives the executive branch the authority to appoint government bodies to oversee the market. When bitcoin is used as a payment method, the Central Bank of Brazil (BCB) is expected to be in charge, while CVM, equivalent to the SEC, will be the watchdog. The BCB and CVM, as well as the federal tax authority (RFB), helped lawmakers craft the overhaul legislation.
The bill aims to regulate the establishment and operation of Bitcoin service providers in Brazil, defining them as entities that provide cryptocurrency trading, custody, transfer, administration, or sale on behalf of a third party. Cryptocurrency service providers will be able to operate in the country only after receiving explicit permission from the federal government.
The law avoided a provision granting tax breaks to miners and also acknowledged that digital currencies facilitated criminal operations due to their anonymity, calling for “closer monitoring” of the industry.
Brazil currently has the most cryptocurrency ETFs in Latin America, and the majority of the country’s major banks and brokers provide some form of exposure to crypto investments or services such as custody or token offerings.