Brazilian president enforces legislation governing the use of crypto as payment
- The Brazilian President signed a regulatory framework for the trade and usage of cryptocurrencies.
- The regulatory framework will be effective after 180 days after signing.
According to the federal government’s official journal, Brazilian President Jair Bolsonaro signed a measure into law on Thursday morning that creates a comprehensive regulatory framework for the trade and usage of bitcoin in the nation.
President Bolsonaro implemented the legislation passed by Congress without any alterations. As initially disclosed, the new regulations acknowledge bitcoin as a digital representation of value that may be used in the South American country as a method of payment and as an investment instrument. The bill’s constitution specifies a virtual asset as “a digital representation of value that may be electronically negotiated or transferred and utilized for payments or as an investment.”
The new law does not declare bitcoin or any other crypto to be the nation’s official form of payment; rather, it takes effect 180 days after it is signed today. Despite this, the legitimacy given to BTC’s use case as payment is significant and might encourage further activity in the nation. However, how much of it really occurs depends on the responsible regulator’s actions.
The executive branch will choose the government agencies in charge of regulating the market. The Securities and Exchange Commission (CVM) of the country would be responsible when utilizing bitcoin as a type of investment asset, while the Central Bank of Brazil (BCB) would be in charge when using it as a method of payment. The BCB, the CVM, and the federal tax authority (RFB) all helped to draught the reform legislation.
The situation isn’t promising if the BCB is certified as the sector’s regulator. Although the regulator cannot alter the legal definition of a digital asset indicated above, there is no reason to believe that the BCB will make special efforts to promote the use of bitcoin as payment.
The chief reason given by the organization’s president, Roberto Campos Neto, for his lack of enthusiasm about cryptocurrencies as a viable alternative to conventional money is their high level of volatility. More significantly, the BCB aims to launch Real Digital, its digital currency, which is scheduled to go online by 2024.
However, the increased regulatory certainty provided by the legislation incentivizes companies to dig further into the expanding payment mechanism. Regardless of whether the BCB actively endorses bitcoin or not, this might lead to more widespread use of it as a form of trade in Brazil.