A bill to legalize the use of cryptocurrencies as a form of payment in Brazil was approved by Jair Bolsonaro, who will step down as President of that nation on December 31.
Bolsonaro’s office said that the President had signed bill 14.478 into law. After it received approval from the nation’s Chamber of Deputies in an article that appeared in the official journal of the Brazilian federal government on December 22. As the last step in recognizing crypto payments, the parliamentary body delivered the law to the President’s desk on November 29.
Crypto Regulation In Brazil
President Bolsonaro implemented the legislation passed by Congress without any changes. As previously reported, the new regulations acknowledge bitcoin and other coins as digital representations of value that can be used in Brazil as a means of payment and as an investment instrument.
The bill’s constitution defines a virtual asset as “a digital representation of value that may be electronically negotiated or transferred and utilized for payments or as an investment.”
The executive branch will choose the government agencies regulating the market. The Central Bank of Brazil (BCB) is anticipated to be in charge when using bitcoin as a form of payment. The nation’s Securities and Exchange Commission (CVM) would be in control when using it as a kind of investment asset. The federal tax authority (RFB), the BCB, and the CVM all contributed to the development of the overhaul legislation.
It is unclear which agency will be the watchdog, but BCB may be one of the top options. Although the watchdog cannot alter the legal definition of a virtual asset indicated above. There needs to be more reason to think that the BCB will make special efforts to promote the use of bitcoin as payment. The chief reason given by the organization’s President, Roberto Campos Neto, for his lack of enthusiasm for cryptocurrencies as a credible alternative to conventional money is their high level of volatility.
The new law excludes all cryptocurrencies from being recognized as legal tender in the country. The new law will be effective 180 days after today. However, the legitimacy given to BTC’s use case as payment is significant and can potentially increase activity in the country. But how much of it occurs depends on the regulator in charge’s actions.
More significantly, the BCB aims to launch Real Digital, its digital currency, which is currently scheduled to go live by 2024.
Brazil’s Central Bank to Launch Its Digital Currency in 2024
Brazil is One of the nations that has made considerable strides in the area of central bank digital currency (CBDC) over the past 12 months. Although the debut of the digital real has yet to be given an official date. Brazil’s Central Bank president Roberto Campos Neto has said that it may happen in 2024.
Campos Neto said during a presentation at a gathering sponsored by the news site Poder 360 that the architecture of the central bank’s digital currency. It will induce banks to tokenize their assets, resulting in significant efficiency gains.
According to Campos Neto, IMF representatives have addressed the central bank and provided feedback that this model appears to be the simplest to adopt and that other central banks should take a closer look.
He also mentioned the fusion of traditional and decentralized finance-based structures with the digital real. Implementing a model that incorporates digital real with Open Finance. A model that encourages sharing data, products, and services amongst regulated companies, is one of the challenges the bank is concentrating on.
In the end, he added, “we were even flattered to have conceived of a system that other central banks are now conceiving about.
According to Campos Neto, the tokenization of deposits should reduce the banks’ settlement, auditing, and funding expenses.
In this case, Brazilians would only need an app to handle their financial assets, including tokenized banking accounts, digital real estate, and cryptocurrency holdings. Campos Neto has brought up this idea before. Campos Neto also mentioned a super app in November, which would integrate all of the features of conventional and legacy financial products into a single center.
The country chose nine partners in March to assist it in creating a digital currency. Brazil will join the Bahamas, Nigeria, the Eastern Caribbean, and Jamaica. These countries have already issued their own CBDCs whenever the CBDC is released. Numerous nations are investigating the technology. Others are even more determined to start utilizing one as a risk-free alternative to cryptocurrencies following the disruption caused by the collapse of the crypto exchange FTX.
Finally, Campos Neto asserts that the digital real’s programmable nature will enable its integration with fresh frameworks that can link Web3 ecosystems with payment systems like Pix.
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