Brazil approves cryptocurrency bill that recognizes Bitcoin as a payment method

Lawmakers in Brazil have approved a cryptocurrency framework law for the use of digital currencies in the Latin American country.

Once passed into law, Brazilians can use Bitcoin as a payment method, while digital assets will be recognized as an investment asset class.

Bitcoin as payment

House bill 4401/21 aims to establish an agency to oversee the Brazilian cryptocurrency industry. This includes managing the operations of service providers, such as crypto exchanges.

Under the bill, exchanges are required to follow specific rules to access the Brazilian market. For example, processes to separate users’ funds from the exchange’s funds. The rules also require service providers to obtain approval at the federal level as well.

The agency will delegate responsibility to relevant, existing, state bodies. According to Bitcoin Magazine, the Central Bank of Brazil will manage the use of Bitcoin for payments. While the Comissão de Valores Mobiliários (securities supervision) will handle the investment regulatory aspect.

While this represents a major step forward for cryptocurrency adoption, the bill falls short of making Bitcoin legal tender.

Who will sign the bill?

The last hurdle before the law is passed is the president’s signature. The current president, Jair Bolsonaro, is set to leave office on December 31, after losing to political rival Lula da Silva by the narrowest of margins on October 31.

The election result has been marred by controversy with Bolsonaro supporters alleging electoral fraud. Commenting on his defeat, Bolsonaro thanked those who voted for him and asked protesters to respect the law.

Earlier this year, before winning the election, da Silva acknowledged the expansion of cryptocurrencies in Brazil to local media. He added that a framework must be in place to harmonize domestic practices with international standards, especially with regard to non-hazardous activities.

“the government, especially through its autonomous central bank, must create norms in line with the international standard to avoid illegal practices that may make use of crypto-assets, such as money laundering and currency evasion, in addition to avoiding fraudulent trading practices.”

Bitcoin was up 2.5% in the last 24 hours and was trading at $16,900 at press time.