Brazil is moving closer to accepting Bitcoin. Though yet to give it a legal tender status, the country’s senate voted to adopt a regulatory framework that recognizes Bitcoin as a “digital representation of value”. Bitcoin is considered as belonging to “virtual assets” category, and thus having the status of money as well as a security. The outgoing President of Brazil will have around two weeks to approve or veto the bill.
The new bill – drafted in collaboration by the central bank, securities commission and the federal tax authority – will require Bitcoin use to be regulated by both its central bank as well as the securities and exchange commission. Since cryptocurrencies are related to several other revenue earning activities such as mining and market exchanges, the Bill has addresses some of these areas as well. While the tax on mining rigs has not been touched, crypto exchanges and their services will be regulated and will require express permission.
The fallout of FTX collapse was also visible in one proposed rule that sought to separate customer assets from the exchange or company assets. This would have made recovery of customer funds easier. However, this rule did not go through.
Another group of entities to be regulated are the virtual asset service providers or VASPs.
According to Bitcoinmagazine, the central bank was first supposed to oversee the entire Bitcoin market. Now the bill seeks two regulators to oversee the money and securities markets respectively.
Brazil’s national digital currency is currently under development.
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