Lawmakers in Brazil have approved a cryptocurrency framework bill for the use of digital currencies in the Latin American country.
Once passed into law, Brazilians can use Bitcoin as a payment method, while digital assets will be recognized as an investment asset class.
Bitcoin as payment
House bill 4401/21 aims to establish an agency to oversee the Brazilian cryptocurrency industry. This includes managing the operations of service providers, such as crypto exchanges.
Under the bill, exchanges are required to observe specific rules to be allowed access to the Brazilian market. For example, processes to segregate users’ funds from the exchange’s funds. The rules also require service providers to gain approval at the federal government level as well.
The agency will delegate responsibility to appropriate, existing, governmental bodies. According to Bitcoin Magazine, the Central Bank of Brazil will manage the use of Bitcoin for payments. While the Comissão de Valores Mobiliários (securities regulator) will handle the investment regulatory aspect.
While this represents a huge step forward for cryptocurrency adoption, the bill falls short of making Bitcoin legal tender.
Who will sign the bill?
The final hurdle before passing into law is the president’s signature. The current president, Jair Bolsonaro, is set to leave office on Dec. 31, having lost to political rival Lula da Silva by the narrowest of margins on Oct. 31.
The election result is marred in controversy with Bolsonaro supporters alleging electoral fraud. Commenting on his defeat, Bolsonaro thanked those who voted for him and asked protestors to respect the law.
Earlier this year, before winning the election, da Silva acknowledged the expansion of cryptocurrencies in Brazil to local media. He added that a framework needs to be in place to harmonize domestic practices with international standards, particularly in respect of nefarious activities.
“the government, especially through its autonomous Central Bank, must create norms in line with the international standard to avoid illegal practices that can make use of crypto assets, such as money laundering and currency evasion, in addition to avoiding practices of fraudulent trading.”
Bitcoin was up 2.5% over the last 24 hours to trade at $16,900 at the time of press.