Brazil Legalizes Bitcoin: New Law Establishes Regulatory Framework
• Brazilian President Jair Bolsonaro signed a bill into law that establishes a complete regulatory framework for the trading and use of bitcoin in the country.
• The new law recognizes bitcoin as a digital representation of value that can be used as a means of payment and as an investment asset.
• The executive branch will select the government bodies that will oversee the market, with the Central Bank of Brazil and the country’s securities and exchange commission being the likely candidates.
On Thursday morning, Brazilian President Jair Bolsonaro signed a bill into law that establishes a complete regulatory framework for the trading and use of bitcoin in the country. This new law is a landmark for the South American nation, as it recognizes bitcoin as a legitimate form of payment and investment asset, and paves the way for greater adoption and usage of cryptocurrency.
Under the new law, a virtual asset is defined as “a digital representation of value that can be negotiated or transferred electronically and used for payments or as an investment”. This definition is crucial, as it establishes the legitimacy of bitcoin and other cryptocurrencies in Brazil. While the new law does not make bitcoin or any cryptocurrency a legal tender in the country, the recognition of it as a payment and investment asset is meaningful, and is expected to spur greater activity in the country.
The executive branch will select the government bodies that will oversee the market. The expectation is that the Central Bank of Brazil (BCB) will be in charge when bitcoin is used as payment, while the country’s securities and exchange commission (CVM) will be the watchdog when it is used as an investment asset. Both the BCB and the CVM, along with the federal tax authority (RFB), helped lawmakers craft the overhaul legislation.
The law will go into effect 180 days after today’s signature. It is unclear what the impact of this law on the Brazilian cryptocurrency market will be, but it is certainly a major step forward in the legitimization of bitcoin and other cryptocurrencies. This new law has the potential to open up the Brazilian market to greater cryptocurrency adoption, and could be a major boost for the industry in the region.