This article is from cointelegraph.com.br and the original article can be read here in Portuguese
On a historic day for cryptocurrencies in Brazil, the federal Senate, approved the “Bitcoin Law in Brazil”, which will determine the creation of specific rules for the crypto assets in the country. The proposal has been debated in the Legislative Power in Brazil since 2015, when Federal Deputy Aureo Ribeiro (SD-RJ), presented the PL2303/15.
The session that approved the project was chaired by the President of the Senate, Rodrigo Pacheco (PSD-MG). Approval took place through a symbolic vote, in which there is no individual record of votes.
“I want to congratulate the rapporteur of the project, Senator Irajá, for the approval, here in the Plenary of the Senate, of this important project”, said the president of the Senate.
The proposal approved in the Senate brings together Ribeiro’s PL 2303/15 and also the PL 3825/2019, authored by Senator Flávio Arns (REDE/PR) and had as rapporteur the Senator Irajá Abreu (PSD-TO). Before being approved in the Senate, the project had its vote postponed twice in the Plenary.
However, the approval of the PL in the Senate Plenary occurred with several recommendations for changes that were made by the senators present at the session.
Modifications proposals
The proposals defended by the senators during the vote must be analyzed by the rapporteur, Senator Irajá, and a new text consolidating, adapting some of the proposed changes should be sent to the Chamber of Deputies.
“We are going to accept certain suggestions such as that of Senator Rodrigo Pacheco”, said the PL’s rapporteur.
During the session, the author of the project, Senator Flávio Arns, asked that a scaling of the penalty for the “Financial Pyramids” be included in the project..
According to Arns, the penalties for this type of crime should be scaled according to the amount of fraud. The same should occur, according to him, for white-collar crimes and money laundering.
“The penalties must be proportionate to the value of the people affected by this type of crime. So whoever committed a crime of US$ 1 billion causing damage to thousands of people would have a greater penalty than the one who committed a minor fraud”, pondered the senator.
Arns’ proposal was also defended by Senator Rose de Freitas (MDB-ES), who asked for greater punishments for crimes involving cryptocurrencies and highlighted that this market already moves more than R$ 200 billion in Brazil.
“The report is very well done, but I believe we need more attention in the progression of the penalty for crimes involving cryptocurrency fraud”, he pointed out.
However, as stated by the President of the Senate, the proposals by Rose de Freitas and Arns, regarding the penalties and penal types defended by the Senators, are already foreseen in the PL .
“If I may, the text proposed by the rapporteur seems to me a text that already addresses these issues well and fulfills these purposes very well.”, said Senator Rodrigo Pacheco.
Senator Carlos Portinho (PL-RJ) asked that the permission for municipal, state and federal tax payments through cryptocurrencies be included in the PL, as well as the issuance and trading of non-fungible tokens ( NFTs ) by the different executive powers, as has been done by Petrópolis (RJ).
According to the Senator, the inclusion of permission is important because cities such as Rio de Janeiro have already announced that they want to accept Bitcoin and crypto-assets as a form of payment for municipal taxes and even for other services such as taxi.
“In the public sector it is only possible to do what is authorized by law, so the inclusion of permission is immensely necessary”, he pointed out.
The president of the Senate, on the other hand, asked that the new penalties under article “171” be changed within the PL, which, according to the rapporteur Irajá, be accommodated in the new wording that will go to the Chamber of Deputies.
Now, after approval, the project still needs to go through the Chamber of Deputies, where it must be approved in the Plenary of the Chamber. However, it should not encounter many obstacles, as the PL 3825/2019 proceeded through the Senate together with the PL2303/15 which has already been approved by the Plenary of the Chamber of Deputies.
After approval in the Plenary of the Chamber, the text goes to the sanction of President Jair Bolsonaro and then it will become law which, according to experts heard by Cointelegraph, should occur later this year.
Bitcoin law in Brazil, will not make BTC legal tender
The possible approval of the Bill at the next plenary meeting will not make the Bitcoin legal tender in Brazil as in El Salvador.
One of the main guidelines approved in the PLs is about which federal entity will be responsible for editing rules for cryptocurrencies in Brazil and, according to the PLs, this task will be determined by the Executive branch, which can either create a new regulator or delegate this function. to the Securities and Exchange Commission (CVM) or the Central Bank of Brazil (BC).
The new regulator will be responsible for defining market guidelines and establishing norms in line with international standards to prevent money laundering and concealment of assets, and to combat the activities of criminal organizations.
The PL also adds to the Penal Code the classification of “fraud in the provision of services of virtual assets”, with punishment of four to eight years of imprisonment and a fine, and adds in the Law of Financial Crimes the provision of services of virtual assets without prior authorization, which, in this case, provides for a prison sentence of one to four years and a fine for the crime.
Another point highlighted in the PL is the incentive for miners to start the operation in Brazil since there will be a complete tax exemption for the import of ASIC in the country.
Experts comment
“We understand that the regulation of virtual assets, a category that includes cryptocurrencies, such as bitcoin, and other digital assets, such as tokens, is fundamental and urgent, and we endorse the initiative of the Legislative Branch. for entrepreneurs and consumer protection” highlighted Julien Dutra, Director of Government Relations at Bitcoin/2TM Market
Also according to him, the proposal approved this Tuesday (26/4) is correct in updating the legislation related to the financial system and the Penal Code, establishing responsibilities and requiring the supervision of customers (KYC) from the crypto sector. know your client”) and transactions (KYT, from “know your transactions”) that are part of the financial crime prevention manuals.
“The regulation, when done well, goes far from being a restriction and guarantees freedom with responsibility. In this way, it stimulates innovation and entrepreneurship and strengthens the country’s position in the new digital economy of which we are a part”, he added.
For Evandro Rodrigues, Co-CEO of Insignia, the crypto assets bills that were unified has as a positive point the fact that they position Brazil as a country that has already paid attention to the need for regulation, being one more State that proposes to compete with other jurisdictions that already regulate cryptoassets.
However, as Rodrigues points out, in the Brazilian case, we are talking about a principled law.
“This is because the detailing of several points is delegated to the infralegal level that, in my opinion, could already be dealt with in the law. Speed is gained with a principled law, but when we delegate all the detail to the infralegal level, we lose if in jurisdictional stability, given the speed and ease with which resolutions, consultation solutions or ordinances can be modified or revoked. Perhaps this is just the beginning and our regulator can always improve in the light of good international practices”, he said.
Bernardo Schucman, Senior Vice President of the Digital Currency Division at the American mining company CleanSpark, points out that the cryptocurrency market, like any other sector of the economy, needs specific regulation so that institutional investors who are averse to greater risks feel encouraged and protected when investing in the sector.
“Regulation is very welcome to the sector and consequently, after the regulation of cryptocurrencies in Brazil, the trend is for Brazil to follow the largest economies in the world and facilitate the mining of these coins on Brazilian soil, which would reflect in a greater decentralization of the control of these blockchains that today in the almost all of them are processed or “mined” in the northern hemisphere in developed countries”, he says.
For the specialist Andrey Nousi, CFA and founder of Nousi Finance, this regulation is important to give investors more security and, consequently, increase the adhesion of investment in cryptoassets.
“The lack of a legal framework to determine what is financial crime and what is not, using digital assets, ends up impacting the entire ecosystem, where the vast majority of people involved are legitimate and want to do a good job. I consider it an advance for Brazil, as it shows the attention that legislators are giving to this market, understanding that the country can triumph a lot”, he says.
Private cryptocurrency fund manager and founder of Financial Move, Tasso Lago, assesses that the regulatory framework is necessary to avoid some scams that have already occurred, such as the case of Grupo Bitcoin Banco, which took billions of reais from investors with a fake brokerage.
“Measures to identify who the investors are, see where the money is going and prevent anyone from opening a brokerage is something necessary to have a healthier market and avoid pyramids and financial fraud. That’s what we’ve been fighting for this market. Obviously, too much regulation harms, but the essential thing of knowing who invests, having locks for brokers and prohibiting money laundering is something interesting, yes, for the market as a whole”, concludes the specialist.
History of the “Bitcoin Law” in Brazil
The first initiative to create a law for Bitcoin and cryptocurrencies in Brazil began in 2015, when federal deputy Áureo Ribeiro presented bill nº 2.303/15. The matter was debated, at the time, in a Special Commission, which held several public hearings and at the end of 2017, deputy Expedito Neto, rapporteur for the PL, presented a report calling for the criminalization of the crypto-assets market in Brazil.
However, the report was not presented to the Special Committee, resulting in it being filed in the PL in 2018. In 2019, the project was dismissed by Deputy Aureo Ribeiro and began to be debated again in the Chamber.
Also in 2019, the topic of cryptocurrency regulation won a debate in the Federal Senate with the presentation, by Senator Flávio Arns (REDE/PR), of PL 3825/19. Each legislative house processed the projects originated by their legislators separately, without asking for the union of the projects.
Thus, after several debates, Ribeiro’s PL 2303/15 ‘came out ahead’ and won a text approved, in 2020, by the Special Committee in the Chamber of Deputies and then, at the end of the year, it won approval by the Plenary of the Chamber of Deputies, moving on to the Senate for review.
In the Senate, in February 2022, the Economic Affairs Committee approved the text of the PL by Senator Flávio Arns who, later, at the request of the PL’s rapporteur, Senator Irajá, had the text of PL 2303/15 approved, which awaiting Senate approval.
With the ‘union’ of the PLs, 2303/15 and 3825/19, the “Bitcoin Law” and the approval of the Senate Plenary, the unified text will go on for approval by the Chamber of Deputies and, after, for presidential sanction and, from there, becomes law in Brazil.
“The absence of more principled rules and the figure of self-regulation in the sector can transform an excellent legislation today into obsolete tomorrow, precisely due to the constant evolution of the crypto-assets sector and blockchain technology, whose current contours are absolutely broader than those verified when of the proposal of the first bill”, says Rodrigo Borges, lawyer with experience in Business Law, Startups, Venture Capital, Digital and Entertainment