Market Warmly Welcomes Brazil’s Draft Crypto Assets Law

Brazilian senators’ approval of a bill to regulate financial transactions with virtual currencies has been generally welcomed by the crypto exchange market and industry experts.

The bill, known as the legal framework for cryptocurrencies, is considered balanced by most market participants, although some experts have pointed out that specific rules and details are still lacking.

The bill now goes to the lower house of congress for a vote. If passed, it will be signed into law by President Jair Bolsonaro.

“The bill comes with the proposal to provide greater security to investors, users and to avoid tax evasion and money laundering. In this regard, it is positive,” said Fabiano Nagamatsu, a crypto-asset specialist, co-founder of Angel Investor Club and director of the startup accelerator. Inova Unigra, told BNamericas.

According to the approved text, a virtual asset is “a digital representation of value that can be exchanged or transferred by electronic means and used to make payments or for investment purposes”.

Among other things, the bill includes fraud using digital currencies in the country’s penal code. Last year, cases of this type of fraud increased by more than 300%, and the number of operations carried out against crimes involving cryptocurrencies increased from 16 in 2020 to 65 last year, according to the federal police data,

The bill sets guidelines for sub-legal regulation, consumer protection and national defense issues. The text also states that the federal government will be responsible for licensing the operation of virtual asset service providers.

However, it has not yet been defined which body or agency of the federal public administration will be responsible for issuing permits and monitoring the segment.

Nagamatsu thinks that as crypto exchanges become financial institutions, they will likely fall under central bank regulation, but that remains unclear.

According to Brazilian internet association Abranet, the bill is an important development for the country’s financial sector.

The entity, which represents more than 400 companies that operate in ICT, Internet and payments in the country, said it supports the regulation of virtual assets, because the definition of concepts and governance “will provide legal certainty not only to the financial sector, but to the entire Brazilian population.

The settlement comes at an opportune time amid the rise in transactions with virtual assets and it could encourage more people to use new technologies in the marketplace, Abranet said in a statement.

The new rules may also promote the development of the sector and the emergence of new technologies, the group added.

In this regard, the bill also provides for the “green mining” of cryptocurrencies, with benefits for crypto mining that have reduced environmental impacts or use renewable energy sources.

The text also reduces to zero taxes on the import, industrialization or marketing of machinery and software used for the processing and exploitation of virtual assets.

Daniel Cawrey, head of strategy at Passfolio, said regulation of the cryptocurrency market brings legal certainty to the industry, fosters innovation and can help fight fraud.

“Passfolio supports regulation of the cryptocurrency market because there are often no punitive measures to deter fraudsters. Something must be done to prevent and combat these criminals and the new legislation is a big step in that direction,” Cawrey said in a statement.

According to the executive, legislation that “helps everyone feel more comfortable” using virtual currencies without having to worry about fraud is very important for the market as a whole.

Marco Castellari, CEO of Brasil Bitcoin, said the project will allow institutional investors to enter this market, spurring development and job creation in the years to come.

Castellari also said that since brokers will now be accredited and licensed, the risks of pyramid schemes and financial fraud should be significantly reduced.

“However, we must ensure that this bill and others do not become excessive to the point of rendering business operations unworkable, as this would be detrimental to the national economy,” he said in a statement. communicated.

Along the same lines, Antonio Neto, head of business development at crypto exchange FTX, said national regulation needs to consider consumer and investor protections without stifling the development of new technologies.

He stressed that Brazilian legislation should be in line with the principles discussed and accepted by other innovation-friendly countries.

“Crypto assets bring financial freedom to all income levels, enabling anyone to own digital assets. And with that freedom comes responsibility, both on the part of the government to prevent fraud, and on the part of the investor to educate themselves financially,” Neto said in a separate statement.

Nagamatsu told BNamericas he expects the new framework to finally come into effect in about a year and a half, once all pending approvals are received, public consultations are conducted and specific regulations are developed.

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Market Warmly Welcomes Brazil’s Draft Crypto Assets Law

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