The South American continent – led by El Salvador and Brazil – is rapidly moving towards the Bitcoin and cryptocurrency market. The Federative Republic of Brazil – through the Chamber of Deputies – has approved the use of cryptocurrencies as a form of payment. Coincidentally, the price of Bitcoin and almost the entire cryptocurrency market are in the green on Wednesday. Bitcoin price hit an intraday high of $17k, while Ethereum is up 4% in the past 24 hours.
A closer look at Brazil and the legalization of cryptocurrency payments
While Brazil has not made Bitcoin a fiat currency like El Salvador did last year, trade between the two countries is expected to increase significantly in the coming years. Furthermore, the proximity and adoption of Bitcoin will foster seamless trade between the two South American countries.
The cryptocurrency law is awaiting approval by Brazil's executive arm led by President Jair Bolsonaro. Once approved, the Brazilian Securities and Exchange Commission (CVM) will have enormous power over most of the country's cryptocurrency assets. Furthermore, the combined dominance of Bitcoin and Ethereum is approximately 53% of the total market capitalization. Therefore, the entire altcoin sector will likely fall under the Brazilian Securities and Exchange Commission.
Under the Brazilian Virtual Asset Law, the Central Bank of Brazil (BCB) will oversee the adoption process to ensure proper tax enforcement. Additionally, Brazilian diasporas will significantly benefit from the use of cryptocurrencies in cross-border payments.
The bill, however, rejected a clause that aimed to reduce some state and federal taxes on purchases of Bitcoin mining machines. However, the Brazilian virtual assets bill intends to clearly define cryptocurrency service providers, including centralized exchanges.
Following the implosion of Terra Luna, FTX and Alameda, the Brazilian federal government intends to thoroughly investigate all cryptocurrency companies before issuing an operating license, according to the bill. For example, part of the bill states that cryptocurrency companies will need to precisely define and segregate client funds and company equity.
The general picture of Bitcoin in Brazil
Over the past twelve months, the cryptocurrency market has significantly reduced in value. Nonetheless, South American countries are busy adopting Bitcoin and other virtual assets to support local businesses. Tourism in the region is expected to increase significantly compared to previous years. Also, global cryptocurrency investors will likely visit these countries to place strategic investments.
Recall that the President of El Salvador Nayib Bukele recently announced that the country will buy 1 BTC per day during the ongoing bear market. Market strategists argue that the upcoming cryptocurrency market will have a parabolic trend for all virtual assets that offer real-world strategic utility.