Brazil has one of the strongest crypto adoption rates in the world. The country is home to 20 billion USD transaction per year according to a Forbes article. The country’s banking system is also working on the crypto projects.
The regulatory environment is also advanced. The first batch of laws and guidelines for crypto operations, mostly involving reporting and taxation requirements were issued back in 2019. Additionally, the government has also been working on a comprehensive digital asset bill since 2021. Earlier this year the bill entered by Senator Flavio Arns was pre-approved in Brazilian Senate’s economic committee and moved to the Senate for voting. Since then, the deputy’s chamber agenda has kept the project live for discussion.
Now, the unexpected fall of FTX services has triggered another round of discussion in the country. Many Brazilian users, by some estimates more than 3% of FTX total customers, have lost their funds.
As a consequence, political forces applied pressure for deputy Aureo Ribeiro’s updated version of the motion, and the bill was approved by the Chamber of Deputies. Its main points were:
- Segregation of the users’ funds from the financing. That is, the crypto exchanges will no longer be able to use the user’s funds as their own debt guarantee (this specific point was taken down because some conservative forces thought it would disturb the markets functioning).
- Governmental supervision on all the online crypto exchange transactions ; Buying, selling and trading is now mandated to being registered.
- Definition of “virtual service providers” and licensing requirements.
- Assigning the Central Bank and Tax collection agency for joint supervision of the sector – leaving Brazilian SEC to only oversee “coin offering”.
- Specifies a new crime type and penalty for virtual asset fraud.
The bill now requires the approval of the executive branch to become law. Brazil´s current minister of economy hasn’t pronounced the approval himself as yet, even though he has declared to be in favour of crypto innovations in many of his interviews. As for president Bolsonaro, many in his own political base voted for the project, which might be an indicator that he would sanction it.
Note: each time a senator presents a project to a different committee, it needs to be pre approved there so it can be voted into the deputy's chamber. in effect, the same text must be approved twice.