The Brazilian Senate is set to vote on a bill that would allow the largest Latin American country to regulate cryptocurrency. The bill was unanimously approved by the CAE, which gives a positive outlook for the the Senate vote. After the bill is passed by the Senate and the lower house, it will be sent to Brazillian President Jair Bolsonaro. The bill has been in the works for 3 years as it was originally submitted by Senator Abrue in 2019.
The bill defines a virtual asset as a “digital representation of value that can be traded or transferred by electronic means and used to make payments or for investment purposes.” A crypto broker or exchange is a legal entity that allows “participation in financial services and provisions,” and performs exchanges between VA and fiat currency or other VA as well as the transfer and custody of VA, according to the bill. The intention of the bill is to “curb or restrict illegal practices, such as money laundering, tax evasion and many other crimes.”
Senator Irajá said that almost 3 million people in Brazil are registered with cryptocurrency exchanges. That number is similar to the amount of investors on the Brazilian Stock Exchange. In 2018 there was 6.8 billion in cryptocurrencies traded in Brazil with 23 exchanges and that increased to 35 exchanges in 2019. Senator Irajá recognizes that crypto assets are not securities and therefore cannot be subject to inspection by the CVM, which oversees the stock market. The exception to this rule would be for a public offering of crypto-assets to raise funds in the financial market.
The proposals by Soraya Thronicke and Flávio Arns do give regulatory powers to the Federal Revenue and Central Bank over the virtual currency market. The Executive Branch will have the responsibility to define which bodies should regulate and supervise cryptocurrency businesses. Senator Irajá set guidelines that said “the regulation of the cryptocurrency market must promote free enterprise and competition” as well as separate control and customer resources, ensure cyber security of personal information and ensure efficient operations.