This article is from cointelegraph.com.br and the original article can be read here in Portuguese
The Federal Senate approved on April 26, the PL 3825/2019, popularly known as the “Bitcoin Law” and which establishes the first legal framework for cryptocurrencies in Brazil, that is, regulates the market crypto assets and establishes the first set of rules for the market.
Despite approval in the Senate plenary the bill still needs to be approved in the plenary of the Chamber of Deputies and, after, being sanctioned by the President of the Republic, Jair Bolsonaro.
The text, among others, includes frauds with digital currencies in the Penal Code and also establishes that it is up to the Federal Government to determine who will be the regulator of the cryptocurrency market, that is, it can delegate this function to both the Brazilian central bank as for the Securities and Exchange Commission (CVM).
The text approved in the Senate has been debated by the legislature in Brazil since 2015 and, since then, both the cryptocurrency market and the view on this market by Deputies and Senators has changed a lot and, to understand if the current text takes into account the new complexity of the crypto market, Cointelegraph spoke with several experts on the subject.
Rodrigo Monteiro, executive director of ABCcripto, highlights that the Association supports the regulation of the market and that the current PL is “on the right track” to regulate the crypto market in Brazil.
“We understand that the debates around the Regulatory Framework are on the right path, as they reconcile all aspects relevant to society, from consumer protection to the prevention and fight against money laundering. In this sense, ABCripto remains optimistic with the perspective that the Bill be approved and enacted as soon as possible, on time and to the satisfaction of the contributions, innovations and protections necessary for the development of our economy.” Rodrigo Monteiro, executive director of ABCripto
Eduardo Neger, president of the Abranet, Brazilian Internet Association, feels the approval of the bill represents a step forward for the country’s financial sector. He points out that Abranet is in favor of regulating virtual assets, since the definition of concepts and governance will provide legal certainty not only to the finance sector, but to the entire Brazilian population.
“As an advocate of free competition and encouraging innovation, the association that represents more than 400 Information and Communication Technology (ICT), internet and means of payment companies across the country, supports the regulation of the activity and emphasizes that it takes place at an opportune moment amid the increase in operations with virtual assets in the country. The new rules can encourage the sector, in addition to favoring the emergence of new technologies, benefiting the final consumer”, he said.
Who also agrees with Monteiro and Neger and sees the regulation of the cryptocurrency market in Brazil as positive is Daniel Cawrey, Director of Strategy at Passfolio. For him, the regulation in the cryptocurrencies market can be positive, especially in terms of fraud.
“As cryptocurrencies gain in popularity, the number of scams also grows, unfortunately, without proper policies for punishment. Passfolio supports regulation in the cryptocurrency market as there are often no punitive measures to ward off fraudsters. Something must be done to prevent and combat the action of criminals and the new legislation is a big step towards that,” she says.
Big step for the cryptocurrency market in Brazil
Binance points out that cryptocurrencies exist in a global network that is not limited by borders, so a global debate on the subject is needed.
“Crypto assets exist in a network, across borders. Therefore, the regulation of this segment needs to be understood in a global context and be preceded by in-depth debates. In the United States, President Joe Biden asked 17 different bodies to study cryptocurrencies to propose a regulation. In the European Union, MiCA has now entered its second phase of debates. It is critical to think about cryptocurrency regulations on a global scale and in the context of the international community.”
Antonio Neto, Business Development Manager at FTX, highlights that regulation cannot stop the advancement of new technologies.
“National regulation has to take into account two concepts that are not exclusive, but complementary: consumer-investor protection, and not suffocating new technologies. Crypto assets bring financial freedom to all social classes, allowing anyone to have digital assets. And this freedom presupposes responsibility, both on the part of the government to prevent fraud, and of the investor to educate themselves financially with quality.”
Renato de Paula, Founder of VPT Token, highlights that the approval by the Federal Senate of PL 3825/209 is a big step for the cryptocurrency market in Brazil.
“Now we have a direction to follow, which helps to emerge more serious projects, in addition to bringing greater security to the investor, and being a great incentive for the development of the sector.”
On the other hand, Marco Castellari, CEO of Brasil Bitcoin, points out that the regulation of cryptocurrency exchanges in Brazil is positive as it facilitates the entry of institutional investors in this market and with this, there will be a great development of this sector, which will certainly generate many resources and jobs in the coming years.
Felipe Medeiros, analyst and partner at Quantzed Crypto, a technology and financial education company for investors, highlights that it is still necessary to be a little cautious because the law will still be approved by the Chamber and then sanctioned by the president, so a lot can change along this path.
“Today, nothing changes,” he said.
However, he points out that if the law is sanctioned the way it is, the main points of change are in relation to exchanges or any institution that takes care of third-party money.
“Basically, the law aims to protect investors’ money from pyramids and scams that are heavily applied using cryptoassets. An important point is that the custodian needs to be regulated and start to present legal guarantees that it can do this custody. It becomes a crime to do so. this custody illegally and the person can be held criminally responsible, which does not exist today and facilitates scams”, he said.
Security for investors
Camila Rocha, Compliance Manager at Coin Cloud, also highlighted that market regulation should help to eliminate fraudsters and, with that, bring more security to the investor.
“The regulation as it is being designed will guarantee more security to investors who have part of their capital allocated in crypto-assets. Among the main measures approved by the Senate are the guarantee of investor data protection, transparency in operations, which will be subject to the Consumer Defense Code, and a more robust control of operations carried out by PEPs (politically exposed persons), as is already the case. done within financial institutions,” he said.
Along the same lines, Bruno Almeida, Head of Compliance Brazil at Ripio, points out that the arrival of a regulatory framework will bring legal certainty for the players and support for the consumer, which will certainly reflect on the growth of the industry.
“It is a clear sign of expansion and the beginning of the popularization of crypto-assets. In addition, with clear rules and standards of governance, it is possible to leverage innovation, without harming the fundamentals of freedom, innovation and democratization of access, offering new options for use of your money and/or new forms of investment, enabling financial solutions for people and businesses, since the use of technology goes far beyond the financial sphere”, highlighted
Lawyers Augusto Coutinho Filho and Gabriel Stanton of the firm Souto Correa emphasize that after the Bill is approved, it will be essential to observe how the regulation will be carried out in the infra-legal scope, considering the regulatory competence to be established by the Chief Executive and its concrete impacts on the crypto-assets market.
Project is progress but leaves many gaps
Rodrigo Caldas de Carvalho Borges, lawyer specializing in Blockchain, partner at Carvalho Borges Araújo Advogados, also highlights the ‘infralegal’ aspect of the current PL and therefore many definitions are still uncertain.
“The bill provides market guidelines, but many issues will be defined by the infra-legal regulator. The PL establishes general guidelines, however, many issues will depend on specific regulation by the Executive Branch (eg Central Bank)” , he said.
He also highlights that the PL will still leave many gaps and also have many negative points.
“The PL has negative points and did not address issues related to the securities tokenization process; it does not define which Executive Branch will be responsible for specific regulation; it does not provide any parameters regarding the bases of authorization for asset service providers and stopped facing issues regarding DeFi, DAO and NFTs”, he concludes.