El Salvador surprised the world when it took the bold step of making Bitcoin the country’s legal tender. Now, Brazil is all set to become the first BRICS nation to adopt Bitcoin as a legal tender.
What happened? Brazil’s Federal Deputy Aureo Ribeiro has revealed that Brazilians could soon be able to buy houses, cars and even McDonald’s with Bitcoin. The South American nation is preparing to vote on a cryptocurrency regulation bill which is expected to be presented to the Plenary of the Chamber of Deputies within the next few days.
“We want to separate the wheat from the chaff, create regulations so that you can trade, know where you’re buying and know who you’re dealing with. With this asset you will be able to buy a house, a car, go to McDonald’s to buy a hamburger – it will be a currency in the country as it happened in other countries.”
Aureo Ribeiro
Bill 2.303/15, which calls for the regulation of virtual currencies, was approved for presentation last week.
If it gets the thumbs up from the Chamber of Deputies this week, then Brazil looks set to follow El Salvador’s example and make Bitcoin a legal tender.
In fact, Brazilians also seem to have a bold profile. A study commissioned by Sherlock Communications and carried out through the Toluna research platform shows that 48% of respondents think that Brazil should also adopt bitcoin (31% agree and 17% strongly agree). Another 30% neither agree nor disagree and 21% are against the idea (12% disagree and 9% strongly disagree).
Why Does It Matter? Brazil is not El Salvador….. It’s big!
Brazil is not El Salvador….. It’s big! It is the largest country in both South America and Latin America. At 8.5 million square kilometres and with over 211 million people, Brazil is the world’s fifth-largest country by area and the sixth most populous.
Read More: El Salvador Pioneers Bitcoin As A Legal Tender
Brazil is the twelfth largest economy in the world by nominal GDP and eighth largest by purchasing power parity in 2020. According to International Monetary Fund (IMF) estimates, Brazil’s 2020 nominal GDP was R$7.348 trillion or US$1.363 trillion.
What is BRICS?
BRICS is the acronym coined to associate five major emerging economies: Brazil, Russia, India, China, and South Africa. Jim O’Neill, Global Economist at Goldman Sachs, coined the term BRIC (without South Africa) in 2001, claiming that the four BRIC economies would come to dominate the global economy by 2050. South Africa was added to the list in 2010.
“The economic potential of Brazil, Russia, India and China is such that they could become among the four most dominant economies by the year 2050.”
Goldman Sachs
The BRICS have a combined area of 39,746,220 square km (15,346,101.0 sq mile) and an estimated total population of about 3.21 billion, or about 26.656% of the world land surface and 41.53% of the world population.
Members of G20, as of 2018, these five states had a combined nominal GDP of US$19.6 trillion, about 23.2% of the gross world product, a combined GDP (PPP) of around US$40.55 trillion (32% of the world’s GDP PPP), and an estimated US$4.46 trillion in combined foreign reserves.
On almost every scale, they would be the largest entity on the global stage. These five countries are among the biggest and fastest-growing emerging markets.
They have taken steps to increase their political cooperation, mainly as a way of influencing the United States position on major trade accords, or, through the implicit threat of political cooperation, as a way of extracting political concessions from the United States, such as the proposed nuclear cooperation with India.
It’s important to note that the Goldman Sachs thesis (and coining the term BRIC) wasn’t that these countries would become a political alliance (like the EU) or even a formal trading association. Instead, Goldman said they have the potential to form a powerful economic bloc, even acknowledging that its forecasts were optimistic and dependent on significant policy assumptions.
Still, the implication was that economic power would bring political power, and indeed leaders from BRICS countries regularly attended summits together and often acted in concert with each others’ interests.
In fact, BRICS nations were also engaged in discussions to issue cross-national digital money in order to reduce the dependence of their economies on the United States. The BRICS Business Council discussed creating a common cryptocurrency during the 11th BRICS summit that was held in Brazil in November 2019.
Brazil Expects Its ‘Crypto Law’ To Become A Model For Other Countries
Brazil’s deputy said he was happy with the approval of ‘Bitcoin Law’, and stressed that Brazilians were already using Bitcoin in many forms. However, Aureo noted that the market was still not regulated and, as such, does not offer legal recognition.
Aureo Ribeiro said that he was sure though, that with the approval of the bill, several more countries could copy his country’s regulatory model.
“We debated a few years for a text that recognizes this asset to finally arrive. This will allow transactions of this asset in our country, which will be regulated by a government agency,” Aureo explained.
“We already made an agreement with both, Central Bank and the Securities and Exchange Commission of Brazil (CVM), over opportunities of this asset and its recognition within, for example, real estate value or currency of daily use.”
Aureo Ribeiro said he was convinced that the proposed bill’s text has the quality to improve the reality of Bitcoin in Brazil.
He mentioned that the bill had widespread government support and had already been aligned with the president of the Chamber of Deputies, Arthur Lira, meaning there are few further barriers to its approval.
So, it seems that Bitcoin will soon become a legal tender in Brazil. Now, it becomes really interesting to see how the remaining BRICS nations act on Bitcoin. China is an exception here which is not going to change its stance so easily.
