- Yesterday, the Brazilian Senate's Economic Affairs Committee (CAE) approved a crypto regulation bill
- The legislation would regulate the everyday use of crypto, define a virtual asset, and the provisions for a VASP
Brazil has set itself on a path towards regulating cryptocurrencies in the country. According to an official statement sent out on Tuesday, the Senate's Economic Affairs Committee (CAE) unanimously approved a piece of legislation to regulate cryptocurrencies in the Latin American country.
The bill, tagged PL 3825/19, was jointly created by the Federal Tax Authority (RFB) and the Brazilian Securities and Exchange Commission (CVM). It now heads for a vote in the Senate, then into the lower house. If approved at these stages, it shall be presented before President Jair Bolsonaro for consideration of assent into law.
The implications of the bill
The bill would define crypto firms as "virtual service providers if signed into law." It would also keep the Brazilian SEC away from crypto, with an exception for instances of initial coin offerings.
Further, the government would decide who gets the reigns to be the regulatory body in charge, though Brazilian Senator Irajá Abreu feels the central bank may well get the role. Speaking to Bloomberg yesterday, the senator tied his expectation to the heavy involvement that the bank had in the creation of the bill.
He added that the bill's focus on investments would result in a much friendlier environment where crypto could get used more regularly.
"With regulation, cryptocurrency will become even more popular. Once this regulation is approved, the trend is that it will be increasingly adopted in the supermarket, in commerce, in a car dealership," he said.
Government authorisation would be strictly required for any cryptocurrency service provider looking to operate in the new dispensation. Service providers will be regulated as the bill intends to define entities providing various services, including crypto trading, custody, transfer of assets, and administration.
Tax incentives and anti-money laundering efforts
The legislation also outlines that 100% carbon-neutral crypto firms would be exempt from taxes for purchases, including hardware and software for mining, processing, and storing virtual assets. These tax incentives will run until December 2029.
The bill would additionally have measures against money laundering. All crypto businesses would be required to notify Brazil's anti-money laundering body, Financial Activities Control Council (Coaf), of suspicious cases.
"The intention of the project is to curb or restrict illegal practices, such as money laundering, tax evasion and many other crimes in this segment. There is a market that is licit, legal, which is the vast majority of this market, but there are exceptions," Senator Abreu said.