President Jair Bolsonaro of Brazil on Thursday, December 22, signed into law a bill that defines the regulations surrounding the usage of Bitcoin within the country. This announcement was made known through the country’s Official Diary of The Union.

The official publication reports that the newly enacted law provides guidelines to be observed in the provision of virtual asset services and the regulation of virtual asset service providers.

The paragraph containing Art. 3 in the publication states that

“a digital representation of value that can be traded or transferred by electronic means and used to make payments or for investment purposes is considered a virtual asset.” 

This pronouncement, therefore, elevates Bitcoin and other virtual assets into the category of assets that can be used to make payments and also for investment in Brazil. Per the law, the national currency, e-currency, and foreign currencies are however not considered virtual assets.

Long road to victory for cryptocurrency

For a journey that started since around February 2022 when Brazilian Senator Flavio Arns introduced a bill to regulate crypto transactions to the Brazilian Senate’s economic affairs committee. In the bill, Arns proposed that the oversight activity for crypto would be done by both the Brazilian Central Bank and the Receita Federal.

Interestingly, the bill was approved by the Senate committee, and from there it had to receive approval from the Brazilian Chamber of Deputies. But only if this approval is granted at the Chamber of Deputies does the bill qualify to be vetoed by the executive branch.

In November, The Brazilian Chamber of Deputies approved Arns’s bill, leaving it with just one hurdle- the approval of the executive branch to cross before becoming law. The bill now signed into law is however expected to enter into force 180 days from its publication date. 

Knowing that the Central Bank of Brazil (BCB), Brazil’s Securities and Exchange Commission (CVM), the Receita Federal (RFB), and the lawmakers were all involved in the drafting process, the executive branch now has to decide on which government body will oversee affairs in the market.

A broader sphere for cryptocurrency in Brazil

With this law ready to get into force, the cryptocurrency market in Brazil is expected to experience a major increase. According to Art. 8 of the publication,

“institutions authorized to operate by the Central Bank of Brazil may exclusively provide the service of virtual assets or combine it with other activities.”

Now that crypto and virtual assets have become regulated by the government of Brazil, fraud using virtual assets, securities, or financial assets, now becomes an offense with a penalty of four to eight years and a fine.

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