Brazil's Economic Affairs Committee passed a cryptocurrency law on Tuesday, marking the country's first step towards regulation.
The bill aims to guide the use of cryptocurrencies in Brazil. It outlines the ground rules for crypto funds and their daily use as a payment option, overcoming a critical legislative stage.
If approved, the move would make Brazil the largest Latin American country to formally regulate cryptocurrencies, Bloomberg reports. Smaller countries in the region, such as El Salvador and Cuba, have already gone a little further in recognizing Bitcoin as a legal tender.
However, before Brazilian President Jair Bolsonaro is signed into law, the legislation still needs to be adopted by the Senate and the lower house. The bill is now being voted on for approval by lawmakers.
Senator Iraja Abreu, who wrote the draft, said the central bank is the body responsible for regulating the cryptocurrency business. He told Bloomberg that Brazil's de facto bank Banco Central has been actively building the law.
The key to cryptocurrency adoption
Cryptocurrency adoption is gaining momentum in Brazil. The nation is eager to regulate cryptocurrencies to keep up with the burgeoning market.
The legislation has established specific rules for virtual goods service providers in the country, such as the prevention of money laundering and the hiding of assets, terrorist financing, among others. The Senate has imposed prison terms and fines for breaking the rules.
According to Abreu, the bill is likely to generate a favorable environment for wider crypto adoption in the nation.
"Once this regulation is approved, the trend is that it will be increasingly adopted in the supermarket, in the trade, in a car dealership".
Additionally, in a recent move, Brazil-based crypto asset managers launched a decentralized exchange-traded fund (ETF) on the B3 exchange. The $ 10,5 million crypto ETF move and latest regulatory bill contribute as a positive catalyst for Bitcoin adoption in Brazil.
Brazil's moves in favor of cryptocurrencies
This year, Brazil is close to starting its pilot program for a digital real - central bank digital currency (CBDC). In September '21, the central bank told the Brazilian Senate it plans to launch the digital version of money in 2024.
Last year, central bank president Roberto Campos Neto said cryptocurrency purchases are affecting Brazil's import figures.
Additionally, the country's beach city, Rio de Janeiro, said last month that it would buy Bitcoin for the city's reserves and provide a 10% tax discount when paid in Bitcoin, after carefully studying the possible legal framework. In addition, the mayor of Rio, Eduardo Paes, has promised to launch his own coin nicknamed “Crypto Rio”.
