Brazil Passes Crypto Bill Recognizing Bitcoin As Legal Tender

• Brazil’s Bitcoin bill is now ‘Awaiting Sanction” from the Executive Branch. 
• The Brazilian Senate approved the bill in April.

Brazilian Chamber of Deputies passed the crypto bill to regulate the cryptocurrency sector in the largest South American country. Finally, after 5 months of voting dormancy, the regulatory body waved a green flag for bill 4401/21 on Tuesday evening. 

Bitcoin as Brazil Legal Tender? 

Originally, Aureo Riberio, a member of the Chamber of Deputies, is the author of this bill. The ultimate motive of the bill was to urge lawmakers to adopt a crypto regulatory framework and legalize Bitcoin payments in Brazil. The bill’s journey was rocky as it has been through a series of prolonged voting rounds. Initially, the Senate approved the bill in April this year. Subsequently, it passed on to the Chamber of Deputies. 

The bill highlighted the significant regulatory actions the country could take in the after of the crypto market. Firstly, it proposed implementing a penalty of 2-6 years and a fine for the illicit crimes associated with crypto assets. Secondly, it mandates the creation of a Virtual Service Provider (VSP) License for any crypto-led companies – exchanges, trading firms – to function in Brazil. 

Also, the bill demands conferring certain regulatory bodies with the power to oversee the crypto sector. As per the provisions, the Brazilian Securities and Exchanges Commission (CVM) will screen the crypto assets recognized as securities. The Executive Branch will be assigning an authority to regulate the non-securities. Either the Central Bank of Brazil (BCB) or the Federal Tax Authority (RFB) is expected to be designated as the overseer. 

The final phase of approval is rested in the hands of the executive branch. Depending on the panic that the FTX collapse has created in the crypto and off-chain market, the timeframe of the approval is seemingly at stake. 

Prominently, Brazil holds 1.5 million Bitcoin holders and crypto users. The crypto community in Brazil expanded by 135% in a year – from around 424k in 2021 to 1.5 million this year. Once, the Brazilian Executive branch passes the bill. A law to legalize Bitcoin as the official means of payment will be amended in Brazil.