Here’s everything in Brazil’s Bitcoin and Crypto Bill

The landmark Brazilian cryptocurrency legislation was approved Tuesday by Brazil’s Chamber of Deputies. It also included modifications to some sections and added a few more sections. The text was brought back to Congress to allow the Senate to vote on the changes. This happened on Tuesday. President Jair Bolsonaro will hand over the Presidential reins to Lula on the 1st of January. He has 15 days to sign the bill or veto it. A partial veto is possible. This means that the president could reject only a portion of the bill. The bill goes into effect 180 days after the president signs it. In this case, the president can reject only a portion of the bill. Given Bitcoin’s decentralized nature and lack of regulatory approval, businesses will be more open to exploring the new payment method. This can lead to a greater adoption of bitcoin in Brazil as a means of exchange. El Salvador has also adopted bitcoin. Businesses in Central America were able to accept bitcoin. This is evident by the fact that the Bitcoin Law predated the Bitcoin Beach’s circular bitcoin economy. However, legal tender legislation has allowed many more companies to accept bitcoin as payment. It attracted investment and tourism. While Brazil has yet to recognize bitcoin as legal tender, it is a missed opportunity. However, this could be a first step towards greater bitcoin payments being used in Brazil’s economy. The actions of the regulator will determine if that happens. At first, the bill tasked Brazil’s Central Bank (BCB) to regulate the country’s bitcoin market. This aspect was removed later and the executive branch is now directly responsible for selecting a watchdog to oversee the sector. The BCB will be responsible when cryptocurrencies are used for payment, while the CVM will be the watchdog when cryptocurrencies are used in investment assets. These two government agencies will likely work together in these matters. The overhaul legislation was drafted by both the CVM and the BCB, as well the federal tax authority (RFB). It is expected that the two government bodies will work together. This definition has two key points. It only applies to entities holding a specific type of Brazilian enterprise ID, CNPJ. (A CNPJ is comparable to a business’ tax identification numbers, TIN, or employer identity number, EIN in the U.S.). It also requires that the services be provided on behalf a third party in order to be considered a VASP. The PenaltiesThe bill stipulates that criminal penalties for fraud and money laundering must also be applied to illegal activities involving cryptocurrency. The Parts that were left outKey aspects of the bill were dropped from the final vote. They range from three to ten years imprisonment and fees. Here are the most important.Patrimonial SegregationOne rule that was added by the Senate required VASPs keep user funds separate and their own capital. It was intended to prevent similar issues to what happened with FTX (now bankrupt global exchange) which apparently used customer funds for trades executed by Alameda, a sister company. This rule stipulated that user funds would be returned to the company immediately in the event of bankruptcy. They could also be used to pay some of the company’s debts or part of bankruptcy proceedings. This section was supported by many key players in the market and the BCB. The BCB and several market players supported the inclusion of this section in Tuesday’s session. The benefit was subject to certain conditions, including the use of renewable energy sources. The rule could have helped to stimulate a healthy mining industry in Brazil, as federal import taxes can often double the cost of certain goods being shipped to Brazil. A third rule allowed public agencies to open accounts at VASPs. This rule was not included in the final text. The executive branch would limit the possibilities of operating such accounts.

 

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