In recent years, there has been a lot of progress in Brazil in terms of the regulation of digital assets. The largest state in Latin America has even managed to increase the level of adoption of cryptocurrencies by its population. The country has a high number of crypto ETFs. Several top-notch brokers and banking institutions offer exposure to cryptos as well as token custody, in Brazil. In this context, the government has taken a major decision that could further improve the adoption of cryptos in the country.
A favorable measure for greater adoption of crypto
It is now legal to pay for goods and services in Brazil using cryptocurrency. Indeed, the Chamber of Deputies has adopted a law to legalize digital assets as means of payment. The regulatory framework received approval through a document codenamed PL 4401/2021. This new law could promote wider adoption of cryptocurrency and boost its expansion in Brazil.
the regulatory framework only requires the signature of the President of the Republic to be valid.
It should be specified that it does not give no legal tender status to crypto. It is only crypto payments that it legalizes. Moreover, it stipulates that airlines will use digital assets, under certain conditions and under the supervision of the Central Bank of Brazil.
Arrangements to avoid risks
The new law stipulates that crypto service providers have an obligation to separate their own funds from their clients’ assets. This measure aims to avoid events similar to the collapse of FTX. Similarly, the regulatory framework defines rules that will specifically govern the operation of exchanges.
Measures are also planned to control custody and crypto management services by trusted third parties. However, a provision of the 2021 bill has not been validated. This is a clause granting tax benefits to cryptocurrency miners. Finally, the new law says nothing about issuing a CBDC.
It appears that once the new law comes into force, the President of Brazil and his ministers will define which office will take care of its supervision. It should be noted that currently the Brazilian body responsible for the regulation of the financial markets deals with the control of tokens considered as securities.
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