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Brazil Adopts Bill Controlling Bitcoin Payments

2022/11/30 (Nov 30th, 2022 9:07 am)
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The new regulations, which were approved on Tuesday night in Brasilia, the nation’s capital, acknowledge bitcoin as a digital representation of value that can be used in the country as a means of payment and as an investment asset.

The bill, which covers a broad range of what it refers to as “virtual assets,” is now all that is needed for it to become law: the president’s signature.

The Central Bank of Brazil (BCB) is anticipated to be in charge when using bitcoin as a form of payment, and the Securities and Exchange Commission (CVM) of the nation will be in charge when using it as a form of investment asset. The federal tax authority (RFB), the BCB, and the CVM all contributed to the development of the overhaul legislation.

Brazil, which has a thriving cryptocurrency market, has occasionally seen more people trade cryptocurrencies like bitcoin than invest in stocks. The nation now aims to create the conditions for that to translate into increased regular use in financial transactions.

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The rejection of a provision that sought to reduce some state and federal taxes on purchases of bitcoin mining equipment was a major oversight in the vote on Tuesday.

The regulation of service providers, such as exchanges, who must adhere to specific rules in order to operate in Brazil, is one of the additional provisions. By defining such organizations as those who provide cryptocurrency trading, transfer, custody, administration, or sale on behalf of a third party, the bill seeks to regulate the establishment and operation of Bitcoin service providers in Brazil. Providers of cryptocurrency services will only be permitted to operate in the nation with the explicit consent of the federal government.

One rule sought to compel such businesses to clearly distinguish between their own assets and that of their clients, such as when handling bitcoin on their behalf. The provision aimed to stop situations like the one we recently witnessed with FTX, in which user funds were mixed with the business’s funds, and to aid in the recovery of user assets in the event of bankruptcy.

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