Crypto

Brazilian crypto law is back on the agenda as FTX collapse sends shockwaves

Nov 17 (Reuters) – Brazilian crypto advocates are urging lawmakers to give final approval to a bill to strengthen oversight of the sector, after the collapse of FTX – once an industry darling – sparked raised new concerns about unregulated digital currencies.

Roberto Dagnoni, a senior executive at SoftBank-backed exchange Mercado Bitcoin, said the law was “sort of dormant” during the election period, but now needed to be a priority.

“If there’s a silver lining (to the FTX disaster), it would be that it puts the law first,” he told Reuters on Tuesday. “The rules that currently exist have not been applicable to some players, so they can do whatever you want… This (law) would change a lot.”

The bill, passed earlier this year by the Senate and now awaiting lower house approval, would require all locally active crypto providers to have a physical entity in the country, and mandatory disclosure of money laundering suspicions. money and other criminal activities. The text provides for fines and even imprisonment for violations.

Brazil is one of the world’s top 10 active markets for crypto, according to data from Chainalysis 2022.

Fernando Furlan, the former president of the country’s blockchain association, also said he hoped the FTX saga would be “enough a boost” to get the law passed.

Furlan added that while the law may make it harder for so-called “dot com” crypto exchanges and smaller groups to operate due to higher reporting standards, it was a healthy compromise.

“If it’s good for Brazilian investors, then it’s good law,” he added.

The law could be adopted sooner than expected.

The Folha de S. Paulo newspaper quoted lower house speaker Arthur Lira last week as saying the chamber was ready to vote on the law before the end of the year.

The president of Brazil’s securities regulator told a public panel that “it’s important that we start having rules” when it comes to crypto, and that the bill “is very close.”

Nevertheless, some key players are skeptical that the bill will pass so quickly, given the 2023 budget issues that took priority after Luiz Inacio Lula da Silva’s victory in the presidential elections.

Lira did not immediately respond to a request for comment.

FTX filed for bankruptcy last week and is under intense scrutiny from US authorities, amid reports that $10 billion in client assets have been transferred from the crypto exchange to the trading company of FTX founder Sam Bankman-Fried, Alameda Research.

FTX didn’t have a big presence in Latin America.

Dagnoni told Reuters that Mercado Bitcoin, primarily active in Brazil and Portugal, has no exposure to FTX, having developed its own custody solution to store client assets.

He added that his exchange had even seen “net positive” volume flows, despite massive drawdowns globally.

“I think people distinguish between assets and mismanagement,” he said.

Reporting by Isabel Woodford in Mexico City; Additional reporting by Marcela Ayres in Brasilia and Stephen Coates

Our standards: The Thomson Reuters Trust Principles.

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