Brazil approves the use of bitcoin as payment – Bitcoin Magazine
Brazilian lawmakers have approved a complete regulatory framework for the trading and use of cryptocurrencies in the country.
Voted on Tuesday evening in Brasilia, the country’s capital, the new rules recognize bitcoin as a digital representation of value that can be used as a means of payment and as an investment vehicle in the South American nation.
The bill applies broadly to a sector it calls “virtual assets,” and now only needs the president’s signature before it becomes law. It does not make bitcoin or any other cryptocurrency a legal tender in the country.
The bill requires the executive to select government bodies to oversee the market. The expectation is that the Central Bank of Brazil (BCB) will be in charge when bitcoin is used as payment, while the country’s Securities and Exchange Commission (CVM) will be the watchdog when it is used as an investment vehicle. Both BCB and CVM, along with the Federal Tax Administration (RFB), helped lawmakers craft the overhaul legislation.
Home to a vibrant cryptocurrency economy, Brazil has at times seen more citizens trading coins like bitcoin than investing in the stock market. Now the country is trying to make arrangements for this to be translated into more daily use in financial transactions.
But not everything in the text is positive for the development of the market in the country. A major omission from Tuesday’s vote was the rejection of a clause that sought to cut some state and federal taxes on the purchase of bitcoin mining machines. Although the text was quite restrictive –– the benefit would only apply to operation with renewable energy sources –– it was apparently not enough to be approved.
Other provisions include the regulation of service providers such as exchanges, which must follow specific rules to operate in Brazil. The bill seeks to regulate the establishment and operation of Bitcoin service providers in Brazil, defining such entities as those that offer the trading, transfer, custody, administration or sale of cryptocurrency on behalf of a third party. Cryptocurrency service providers will only be able to operate in the country after explicit permission from the federal government.
One rule sought to require such companies to explicitly separate their property from capital owned by customers – such as bitcoin that are fixed deposits for users. The clause sought to prevent incidents such as recently seen with FTX, where user funds were commingled with company funds, and help recover user assets in the event of bankruptcy. It was rejected in Tuesday’s vote.
