Quick Take
- Brazil is likely to approve its ‘Bitcoin Bill’ next week.
- The scheduled voting on the bill was cancelled because only four senators were present.
- The bill proposes a four to eight years in prison, in addition to a fine, for crypto related fraud.
- Incentive for miners to start operating in Brazil with tax exemption for the import of ASICs.
Brazil is likely to pass its ‘Bitcoin Bill’ next week. Brazil’s Senate president postponed the voting on the ‘Bitcoin Bill’, because only four senators were present.
What is the scope of this ‘Bitcoin Bill’?
This ‘Bitcoin Bill’ proposes the regulation of the crypto-assets market in the country, through the definition of concepts; guidelines; Exchange licensing system; supervision and inspection by the Central Bank and CVM; measures to combat money laundering and other illicit practices; and penalties applied to fraudulent or reckless management of cryptocurrency exchanges.
Senate postpones the vote
On Tuesday, April 12, Brazil’s Senate president postponed the vote on PL 3825/2019, which creates the first set of rules designed to regulate the cryptocurrency market in Brazil.
The bill was authored by Senator Flávio José Arns and had Senator Irajá Abreu as rapporteur, which was not voted on during the session.
According to an agreement between Senators Rose de Freitas (MDB-ES), Fábio Garcia (União-MT), Senator Irajá (PSD-TO) and the president of the session Senator Veneziano Vital do Rego (MDB-PB), the bill will be voted on next Tuesday, April 19th.
“This project that has already passed through the house is an important project and deserves a very in-depth debate. Finally, I want to propose that it be removed from the agenda because it has a low quorum. This is a very important regulation and there must be a more active plenary. We only have 4 senators present here”, highlighted Senator Rose de Freitas.
“We had a great conversation with the Chamber of Deputies and this work is the result of the work of several senators and this matter has already been unanimously approved by the committee and we presented a new wording to the Senate plenary, taking advantage of the senators’ suggestion and thus we are building a consensual text between the Senate and the House,” stated the project’s rapporteur, Senator Iarajá.
“There is a very strong appeal from the market and the Central Bank for this project to be approved”, stressed Senator Iarajá.
A likely approval of the Bill at the next plenary meeting will not make Bitcoin a legal tender in Brazil, as it does in El Salvador. In June last year, El Salvador passed the new ‘Bitcoin Law’ to become first country in the world to adopt Bitcoin as a legal tender.
Who will be responsible for the standards?
One of the main guidelines approved in the Bill is regarding which federal entity will be responsible for making rules for cryptocurrencies in Brazil and, according to the PLs, this responsibility will be defined by the Executive branch, which can either create a new regulator or may confer this function on the Securities and Exchange Commission (CVM) or the Central Bank of Brazil (BC).
The new regulator will be responsible for establishing guidelines regarding the market and defining norms in line with international standards in order to prevent money laundering and the concealment of assets and to combat the activities of criminal organizations.
The bill proposes a four to eight years in prison, in addition to a fine, for those who commit fraud related to virtual asset services.
Another issue highlighted in the PL is the incentive for miners to start operating in Brazil as there will be a complete tax exemption for the import of ASICs in the country.
However, this should not be enough to bring Bitcoin miners to Brazil since the main cost of the mining process is energy, which in the country is one of the most expensive in South America, approximately five times higher than in Paraguay and in Venezuela.
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