On November 29, Brazil’s Congress voted to pass a bill that grants banks and financial institutions the right to offer services related to digital currencies. Propelling the adoption of crypto in South America, Brazil’s new law regulates the use of cryptocurrencies as a form of payment for the 214 million people living in the country.
A long-standing pioneer in the movement to adopt cryptocurrencies, Brazil is noted as having the most cryptocurrency ETFs than any other country in Latin America. While many major banks in the country currently offer their clients exposure to cryptocurrencies through various services or investments, this marks a major step forward for the adoption and regulation of the digital asset industry.
The bill was crafted under the guidance of the Central Bank of Brazil (BCB), the Securities and Exchange Commission of Brazil (CVM), and the federal tax authority (RFB). Approved by the Chamber of Deputies, it states that digital currencies, as well as airline traveler rewards, fall under the definition of “payment agreements” and fall under the supervision of Brazil’s central bank.
While it still requires the signature of the President, this is a ground-breaking step forward when it comes to countries building the necessary regulatory framework to support the adoption of cryptocurrencies. Once signed, the government will need to assign an office to supervise the matter. The CVM will then only be responsible for managing tokens categorized as securities.
What This Means For Crypto In Brazil
It’s important to note that while this doesn’t make cryptocurrencies legal tender, it does offer them legal status to be used for goods and services across the country. It also allows financial institutions the opportunity to offer crypto-related payment services, which they can now offer alongside their Real payment services.
It’s believed that the BCB will oversee when Bitcoin is used as a payment while the CVM will supervise when it is used as an investment asset.
Brazil’s largest private bank, Itaú, has since announced plans to build an asset tokenization platform while Santander (the Brazilian subsidiary of the Spanish corporation) has announced their intentions to offer crypto trading services.
The bill will also require any company offering crypto services (from custodian platforms to exchanges) to register as a legal entity in the country and gain “explicit authorization by the federal government” to operate. They will then need to abide by the set-out rules of operation and most importantly keep their funds separate from that of their clients’.
In a giant step forward for crypto adoption, this news has shed a positive light back on the crypto space. We will keep you posted on any developments with regard to the law being implemented.
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