Brazil approves bill, regulating Bitcoin as Payment

In a major update to widespread adoption, the Brazilian legislature this week approved a comprehensive legal framework for the use and trading of cryptocurrencies. The update will see Bitcoin recognized as a digital representation of value in the country, supporting the property as a means of payment and investment option. The announcement comes after a meeting in Brasilia, the capital of the country, held on Tuesday, November 29, 2022.

Although the bill did not define Bitcoin as a "legal entity", it passed a law that legalized cryptocurrencies as a form of payment in all countries. A move that will ultimately boost the acceptance of digital currency as a form of currency in the country. The bill applies broadly to cryptocurrency assets, which it considers "virtual assets" and requires only the president's signature to become law.

The move will provide legal status for payments made in cryptocurrencies for goods and services, but not legal tender status. In addition, the bill gives the executive the responsibility of selecting the government officials responsible for overseeing the market. According to the original proposal, the Central Bank of Brazil (BCB) will examine Bitcoin as a means of payment, while the CVM will act as a watchdog when the digital asset is used for investment. Although this two-pronged approach sounds good on paper, it will undoubtedly be tested in the next few years.

Crypto actor Mark Tencaten discussed this issue, saying, “This is a big step forward not only for the country of Brazil, but also for cryptocurrencies around the world. Although they did not recognize Bitcoin as legal, they certainly did the right thing. I see this as a huge boost for the city's vision and potential for economic growth."

The bill further establishes clear rules for the operation of cryptocurrency exchanges, which have been subject to global scrutiny in recent weeks. In general, however, the decision is seen as a positive one, focusing on consumer protection and transparency for all parties.

Brazil has been a pioneer in the crypto industry, offering the largest number of cryptocurrency ETFs in Latin America. With many of the country's capital banks and Broka giving exposure to cryptocurrency investments, it is clear that the country is making great progress towards digital currency adoption.
Although India recently revealed its plans to introduce a CDBC (Centrally Backed Digital Currency), Brazil's exit should attract more attention. Although cryptocurrencies were created to be regulated, it is clear that many governments around the world are exploring the technology as a way to manage financial policy.

Mark Tencaten gave a more in-depth look at the idea for a government-backed digital currency "I really see this as the next logical step from the central bank. If they have their own digital currency, they can track every dollar settled back to the source. They will no longer need a bank, because they will finally have direct access to customers. I really see it as a slippery slope if used incorrectly, as it violates a lot of consumer protections and privacy. In the end, it was a bit too soft. The purpose of these funds (to support governance) is what CDBC is trying to maintain."

Time will tell what the true intentions behind this decision are, but for now, it is a positive step forward for the cryptocurrency industry.