The South American region is looking more and more favorably towards the cryptocurrency market. This time, Brazil is making the headlines as it is in the process of passing a new landmark law.
Region’s largest country adopts regulations
Brazil is sending a clear signal to the world – the Bitcoin and altcoin market should be regulated. With that, the country’s Senate Committee on Economic Affairs has approved a bill on blockchain technology. The next scheduled step is for it to be voted on by the Senate, as well as the Lower House, to finally reach the desk of President Jair Bolsonaro.
The deepening adoption of cryptocurrencies is causing more and more jurisdictions to introduce laws to regulate the sector. Brazil is joining their ranks. The newly created law aims to spread the use of digital assets in South America’s largest country. Irajá Abreu, a Brazilian senator who promoted the regulation of cryptocurrencies as early as 2019, stated in an interview with Bloomberg that once approved, the law will gain much wider adoption. According to him, cryptocurrencies will become a common part of trading. The new law also opens the door for them to be accepted in supermarkets, car dealerships, and any other place where there is a seller-customer relationship.
The purpose of the new law is to define virtual currencies as a digital representation of value. This will make it possible not only to make payments with them, but also to make money transfers. It will also open the way for them to be used for investment purposes. Cryptocurrency exchanges and brokers will also be affected by the changes. Under the law, these entities will be recognized as institutions that enable participation in financial services.
Tackling illegal practices
Another impact of the Brazilian regulations is the introduction of clear rules to counter money laundering and non-payment of taxes. The financing of terrorism and any other form of criminal activity, which is quite common in Latin American countries, is also not without significance. The new law will somehow make cryptocurrencies free from the ideology that they are primarily used in the black market.
It is worth mentioning that Brazil is also conducting highly advanced works devoted to the introduction of a central bank virtual currency (CBDC). However, according to the Brazilian regulator, its main purpose will not be commercial use, but investment. Initial pilot work is expected to take place in the first half of this year. The date of the final implementation however is not yet known.