Brazil legalizes crypto, and while paying for goods and services with cryptocurrency will be legal, cryptocurrencies are still not legal tender.
Brazil has not designated Bitcoin as a legal tender. Still, it has done the next best thing: it has passed legislation legalizing cryptocurrencies as a means of payment throughout the country, providing a regulatory boost to digital currency adoption and ecosystem expansion.
Brazil’s Chamber of Deputies has established a regulatory framework that will allow cryptocurrencies to be used as a form of payment in the country.
Brazil legalizes crypto with PL4401/2021 legislation
The legislation, issued under the code PL 4401/2021, includes virtual currencies and frequent traveler incentives from airlines (popularly known as “miles”) in the category of “payment agreements” subject to supervision by the country’s Central Bank.
The law, which has already been approved and only needs the signature of the President of the Republic to be enacted, grants legal status to payments in cryptocurrencies for goods and services—but not legal tender.
Brazil has made significant strides in cryptocurrency legislation and investor adoption. It currently has the most cryptocurrency ETFs in Latin America, and the majority of the country’s major banks and brokers provide some form of exposure to cryptocurrency investments or similar services such as custody or token offerings. Even Ita, one of Brazil’s largest private banks, is working on tokenizing assets as part of its future suite of investor services.
Following the passage of the law, it will be up to the executive branch of government (the president and his cabinet) to decide which body or office will be in charge of overseeing the matter—only tokens classified as securities will fall under the jurisdiction of the CVM, Brazil’s equivalent to the SEC.
Until now, the most involved public agencies in the field have been the country’s own Central Bank and the CVM. Furthermore, the law specifies requirements for the operation of cryptocurrency trading platforms and third-party custody and administration of cryptocurrencies.
The law does not mention the issue of a central bank digital currency, yet, the government has already made great headway in this direction.
One of the most crucial components of the legislation is the requirement for service providers to keep their money separate from those of their consumers in order to avoid a situation similar to that of FTX, in which the exchange utilized its clients’ cash for its own financial activities.
The bill avoided a clause that would have granted cryptocurrency miners tax breaks. It also acknowledged that digital currencies assisted illegal operations due to their anonymity, asking for “closer monitoring” of the industry.
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Is Brazil allowed to buy Bitcoin?
Brazil has no laws prohibiting the use or purchase of bitcoin or other cryptocurrencies for non-criminal activities.
Crypto ownership in Brazil
Brazilians now own 7.8% more cryptocurrencies than they did in 2021, an increase of nearly 6 million users from 4.9% in 2020.
Countries that allow cryptocurrency as legal tender
Countries that allow cryptocurrency as legal tender is a short but growing list. Right now, just the Central African Republic (XAF, BTC) and El Salvador (USD, BTC) allow it.
According to CoinMarketCap, the next ten countries that will allow cryptocurrency as legal tender are:
- United States
- United Arab Emirates
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