Brazil Makes the Central Banks and Securities Watchdogs for the Crypto Space
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Brazil is one of the rare countries that’s open to the idea of Bitcoin and cryptocurrencies in general. A law has been in works for years, and new president Luiz Inacio Lula da Silva has finally decided to move forward with it. The president has signed the previous draft law into a bill which gives the central bank and securities regulator jurisdiction over all digital assets including Bitcoin.
The new bill has clearly defined regulatory framework and a licensing structure too. It takes effect right away, so we can safely say June 20 is Brazil’s D-day when it comes to cryptocurrencies and the digital finance sector.
A Huge Win for Bitcoin
The first rules for the draft law were proposed last December. It was time for South America’s largest economy to create a framework for digital assets. With the bill, Brazilians could finally make legal payments with digital assets, and there were also penalties set for wrongdoings in this sector. While there wasn’t a clear timeframe on when it would be signed into law, it arrived sooner than expected.
New president Lula da Silva signed the bill on June 20 with immediate effect. Under the new law, the country’s securities commission-the Comissao de Valores Mobiliarios-will oversee the digital industry and all tokens that are officially branded and considered securities. So far, the law doesn’t state which tokens are considered securities. This responsibility will be handled by CVM, so it remains to be seen what’s done on this front.
On the other hand, Brazil’s Central Bank will issue digital asset firm licenses. The licensing framework hasn’t been completed yet, but it’s expected that it’ll all be finished in just a few weeks. This kind of legal clarity will come as a welcome amnesty for Brazilian VASPs. This goes double for those that partner up with banking partners. In the past, the country’s lack of regulatory framework saw many personal accounts closed by banks. Most often, these accounts were closed without explanation, which was mind-boggling for many people who took their banks to court.
Still a Lot of Work to be Done
While the new law definitely puts Brazil on the right path, there are some fine details to tune. For example, some stuff is really unclear. It doesn’t dive into small details such as wallet security requirements or placing exchanges. Prohibiting asset comingling and KYC are also some things that need explanation. But, we’re sure everything will come clear in a short time as the law is already into effect.
In 2022, Brazil was ranked 7th on the list of global digital asset adoption. It’s clear that the people there love the opportunities cryptocurrencies offer. The largest exchange is Mercado Bitcoin which was recently valued at over $2 billion. It’s supposed to be the first in line to receive the new license, which has reportedly already happened.
Either way, the new law is a win-win for both the crypto market in Brazil and the people. With a clear regulatory framework, it’ll be easier than even to buy Bitcoin and use it.
