22 Dec 2022
Brazilian President Signs Bitcoin Payment Bill
The use of bitcoin as payment is now governed by a comprehensive regulatory framework for cryptocurrencies signed by the president of Brazil.
According to the federal government's official journal, Brazilian President Jair Bolsonaro signed a bill into law on Thursday morning that creates a comprehensive regulatory framework for the use and trading of bitcoin in the nation (DOU). President Bolsonaro implemented the legislation passed by Congress without any changes. As previously reported, the new regulations acknowledge bitcoin as a digital representation of value that can be used in the South American country as a means of payment and as an investment asset. The bill's text defines a virtual asset as,
"a digital representation of value that may be electronically negotiated or transferred and used for payments or as an investment."
The new law does not declare bitcoin or any other cryptocurrency as the nation's official form of payment; instead, it takes effect 180 days after it is signed today. Despite this, the legitimacy given to BTC's use case as payment is significant and could encourage more activity in the nation. However, how much of that occurs depends on the responsible regulator's actions. 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, and the nation's Securities and Exchange Commission (CVM) will be in charge when using it as a form of an investment asset. The federal tax authority (RFB), the BCB, and the CVM all contributed to the development of the overhaul legislation.
The outlook isn't promising if the BCB is confirmed as the sector's watchdog. Although the regulator cannot alter the legal definition of a virtual asset mentioned 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 viable alternative to fiat money is their high level of volatility. More significantly, the BCB is working on launching Real Digital, its digital currency, which is currently scheduled to go live by 2024. However, the increased regulatory clarity provided by the legislation incentivizes companies to dig deeper into the burgeoning payment method. Whether the BCB actively endorses bitcoin or not, this could lead to more widespread use of it as a form of exchange in Brazil.
The legislation is broken down in great detail here.
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