Brazil’s cryptocurrency regulation law approved

This day will go down in history for cryptocurrencies in Brazil, the Federal Senate approved the “Brazilian Bitcoin Law”, which will determine the creation of specific rules for cryptoasset trading in the country. The proposal has been debated in the Legislative Branch in Brazil since 2015, when federal deputy Aureo Ribeiro (SD-RJ), presented PL2303/15.

The session that approved the bill was chaired by Senate President Rodrigo Pacheco (PSD-MG). The approval came in a symbolic vote, in which individual votes were not recorded.

In the same assembly the president of the Senate said:
“I want to congratulate the rapporteur of the bill, Senator Irajá, for the approval, here in the Senate plenary, of this important bill”.

The proposal approved in the Senate brings together Ribeiro’s PL 2303/15 and also PL 3825/2019, authored by Senator Flávio Arns (REDE/PR) and whose rapporteur was Senator Irajá Abreu (PSD-TO). Before being approved in the Senate, the bill had its vote postponed twice in the Plenary. Nevertheless, the approval of the PL in the Senate Plenary took place with several recommendations for changes made by the senators present at the session.

Proposal for some changes.

The proposals defended by the senators during the vote will have to be analysed by the rapporteur, Senator Irajá, and a new text consolidating and adapting some of the proposed changes will have to be sent to the House of Representatives.

In the same session, the author of the bill, Senator Flavio Arns, asked that a sanction for “Financial Pyramids” also be included in the bill, penalties for such offences should be graduated according to the amount of fraud, with white-collar crime and money laundering to be added as well.

As an example, the senator added, “Penalties should be proportionate to the value of the people affected by these types of crimes. Thus, someone committing a $1 billion crime causing harm to thousands of people would have a greater penalty than someone committing a lesser fraud”.

Arns’ proposal was also supported by Senator Rose de Freitas (MDB-ES), who called for greater punishment for cryptocurrency-related crimes and pointed out that this market already moves more than $200 billion in Brazil.
“The report is very well done, but I think more attention needs to be paid to the progression of punishment for cryptocurrency fraud crimes”, she said.

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However, according to the President of the Senate, the proposals by Rose de Freitas and Arns, regarding penalties and criminal types defended by the senators, are already included in the PL .

Senator Carlos Portinho (PL-RJ), meanwhile, called for the inclusion in the PL of permission to pay municipal, state and federal taxes through cryptocurrencies and also the issuance and marketing of non-fungible tokens (NFT) by the different executive powers, as Petrópolis (RJ) has done.
According to the senator the inclusion of the permit is important because cities such as Rio de Janeiro have already announced that they want to accept Bitcoin and other cryptoassets as a form of payment for municipal taxes and even other services such as taxis.
“In the public sector you can only do what is authorised by law, so the inclusion of the permit is immensely necessary”,  he said.

After approval, the bill still has to pass through the House of Representatives, where it must be approved in the Plenary of the House. However, it should not encounter many obstacles, as PL 3825/2019 was processed in the Senate together with PL2303/15, which has already been approved by the Plenary of the House of Representatives.
After approval in the House Plenary, the text will be sent to President Jair Bolsonaro and then become law, probably by the end of the year.

The possible approval of the bill in the next plenary session will not make Bitcoin legal tender in Brazil as it is in El Salvador.
One of the main agendas approved in the PLs is over which federal entity will be responsible for editing the rules for cryptoassets in Brazil and, as far as the PLs indicate, this task will be determined by the executive branch which may create a new regulator or may delegate this function to the Securities and Exchange Commission (CVM) or the Central Bank of Brazil (BC).
The new regulator will be in charge of defining market guidelines and establishing rules in line with international standards to prevent money laundering and concealment of assets, as well as to combat the activities of criminal organisations.
The PL also adds to the Penal Code the criminalisation of “fraud in the provision of virtual asset services”, punishable by four to eight years’ imprisonment and a fine, and adds to the Financial Crimes Act the provision of virtual asset services without prior authorisation, which, in this case, provides for imprisonment of one to four years and a fine for the offence.
It is worth noting that the PL is the incentive for miners to start operations in Brazil, as there will be a total tax exemption for the import of ASIC mining equipment into the country.

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