Brazil legalizes crypto as a payment method – Decrypt

Brazil didn’t designate Bitcoin as legal tender, but it did the next best thing: it passed a law legalizing cryptocurrencies as a means of payment across the country, giving a regulatory boost to adoption. digital currencies and the expansion of the ecosystem.

Brazil’s Chamber of Deputies has approved a regulatory framework legalizing the use of cryptocurrencies as a means of payment in the country.

The document—signed under code PL 4401/2021—provides for the inclusion of virtual currencies and airline frequent flyer awards (the popular “miles”) in the definition of “payment arrangements” under the supervision of the country’s Central Bank.

The law, which is already approved and only requires the signature of the President of the Republic to be promulgated, gives legal status to cryptocurrency payments for goods and services, but does not grant them legal tender status.

Brazil has made considerable progress in terms of regulation and investor adoption of cryptocurrencies. It is currently the country with most cryptocurrency ETFs in Latin Americaand most major banks and brokers in the country currently offer some type of exposure to cryptocurrency investments or similar services like custody or token offers. Even Itaú, one of Brazil’s largest private banks, is working to tokenize assets as part of its future investor services package.

After the law comes into force, it will be up to the executive branch of government (the president and his ministers) to determine the body or office to oversee the matter – only tokens classified as securities fall within the purview of the CVM, the Brazilian equivalent of the SEC.

Until today, the public bodies most involved in the field were the country’s Central Bank and the CVM. In addition, the law establishes rules for the operation of cryptocurrency exchange platforms, as well as custody and administration of cryptocurrencies by trusted third parties.

The law does not mention any provision relating to the issuance of a central bank digital currency; however, the country has already made significant progress in this regard.

One of the most important aspects of the regulations is the requirement for service providers to segregate their funds from those of their clients in order to avoid a situation similar to that of FTX, where the exchange uses its clients’ funds for its own financial operations.

The law avoided a provision granting tax benefits to cryptocurrency miners and also acknowledged that digital currencies facilitate criminal operations due to their pseudonymous nature, calling for “closer oversight” of the industry.