Brazil President signs bill to approve bitcoin as payment

Brazilian President Jair Bolsonaro has appended his signature to a bill seeking to legalize virtual currencies as a means of payment in the country.

Bolsonaro signed the bill into law after it scaled the legislative hurdles from the Brazilian Chamber of Deputies. The Chamber of Deputies forwarded the bill to Bolsonaro’s desk at the end of November, and within a month, the outgoing president gave executive assent to the proposed legislation.

Despite the sector’s discouraging milestones, Brazil has sought to legalise cryptocurrency as a payment for a while. Earlier this year, there was a report about Brazil’s advancement to explore cryptocurrency as a means of payment. 

It is one of the countries in South America that has been making moves as regards cryptocurrency regulation since 2021. The Brazilian Congress proposed a bill presented by Federal Deputy Paulo Martins to launch Bitcoin and other digital currencies as legal means of payment.

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The bill proposed to achieve this goal by tweaking existing Brazilian laws, which include the civil procedure code. The approval of the bill will usher disposition XIV in article 835 of the Civil Procedure Code, which states:

“Crypto assets understood as digital representations of value that, not being currency, have their own unit of measure, traded electronically through the use of cryptography and within the scope of distributed ledger technologies, used as a financial asset, means of exchange or payment, an instrument of access to goods and services or investment.”

Brazilian lawmakers approved the bill as a law in November to launch a complete regulatory framework for crypto governing the use of bitcoin as payment has been launched. Cryptocurrencies can be used as payment on Brazilian soil. It signals the country’s charge for innovation and growth.

The new policies acknowledge bitcoin as a virtual representation of value that can be exchanged for payment and an investment asset within the South American country.

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Brazil completes crypto legalization amidst the market’s upheaval 

The speculations hint that the Central Bank of Brazil (BCB) will be saddled with the responsibility of regulation when bitcoin is used as payment. At the same time, the country’s securities and exchange commission (CVM) will provide checks and balances when bitcoin is used as an investment asset. 

Interestingly, both the BCB, the CVM and the federal tax authority (RFB) assisted lawmakers in formulating the overhaul legislation. The new law criminalizes digital asset fraud and imposes stiff penalties for offenders while providing a licensing regime for firms operating in the industry.

Brazil houses a high-spirited cryptocurrency economy and has witnessed its citizens massively exchange coins such as bitcoin than invest in the stock market. Now, the country sets to create room for that to translate into more daily usage in financial transactions.

Asides from designating crypto as a payment method, the law enables the creation of licenses for crypto exchange platforms and custody and management of crypto by third parties. In addition, the law will require exchanges to make a clear distinction between company and user funds, to avoid another incident like the FTX collapse.

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Nonetheless, while the FTX collapse has impacted many sectors within the crypto space, it will not affect everyday crypto use for Brazilians, according to Thiago César, the CEO of Transfero Group, which is closely tied to the Brazilian crypto ecosystem.

The law is expected to come into effect 180 days after Bolsonaro’s signing, making June 2023 the tentative date for the launch.