The legislation, enacted by the president, followed approval by the country’s Chamber of Deputies and the Senate.

Brazil Recognizes Crypto as a Payment Method

The bill recognises Bitcoin and other digital assets as payment methods and investment vehicles but does not make them legal tender in the Latin American nation.

“A digital representation of value that can be negotiated or transferred electronically and used for payments or as an investment,” the bill stated.

According to the new law, crypto assets that are considered securities will be overseen by the country’s securities and exchange commission (CVM). In contrast, assets used as payments are expected to be supervised by a to-be-determined regulator.

So far, the regulators that are more involved in the crypto sector are the country’s central bank and the securities watchdog.

The law also makes provisions for crimes or fraud involving digital assets, which carry a jail term of between four and eight years plus financial penalties. The bill also requires digital asset providers to only operate in the country with prior authorisation from a federal public administration body or entity.

Additionally, the legislation requires these providers to have physical entities with jail terms and fines for those that violate the rules. The new law will take effect 180 days after it was signed on Thursday, December 22, 2022.

Legislation to Drive Crypto Adoption in Brazil

The new guidelines are expected to further drive crypto adoption in Brazil, the largest economy in Latin America and one of the most active markets globally for crypto adoption.

According to a KuCoin report, 16% of Brazil’s population, representing 34.5 million nationals, are considered crypto investors. Brazil is currently the country with the most cryptocurrency ETFs in Latin America, and several banks and financial service providers offer exposure to crypto-related products to investors in the country.

(by William A. Frederick)