On Thursday, President Jair Bolsonaro of Brazil gave his approval to a bill that would regulate cryptocurrencies. The Chamber of Deputies and the Senate of the country had previously adopted the bill. As the last step in recognizing crypto payments, on November 29, the legislative body sent the law to the President’s desk.
The new legislation makes the fraudulent use of virtual assets a crime that can result in a sentence of between four and six years in prison and a monetary fine. Additionally, it establishes a license known as a “Virtual Service Provider,” which should be requested by businesses involved in digital assets, such as exchanges and trade intermediates.
In addition, as a direct response to the failure of FTX, the law was amended to include requirements that mandate exchanges differentiate between the assets of individual users and those of corporations.
It will not be possible for residents to use cryptocurrencies such as Bitcoin as a form of legal money in the country. Despite this, the recently enacted law extends the list of legal payment methods in Brazil to cover many digital currencies.
The Brazilian Securities and Exchange Commission will monitor any digital assets that, according to the new legislation, meet the criteria to be classified as securities. Digital assets that don’t fit into that group will be governed by a different organization that has yet to be established.
In addition, businesses will have 180 days to adjust to the new regulations, and it is anticipated that the cryptocurrency law will become operational in June 2023.
The Brazilian Association of Cryptoeconomics, comprised of local companies operating in the field, has expressed their approval of the newly implemented rule. It was thought to be “very important” for establishing “clear rules” and obligations for the country’s enterprises.
It may also strengthen investor security by delineating brokerage responsibilities and the essential pathways for inquiry and punishment.
On December 31, the incumbent President of Brazil will officially step down from his position. The following month, Luiz Inácio Lula da Silva will be sworn in as Brazil’s new President. The latter had previously made statements favoring implementing cryptocurrency and blockchain technology.