- Yesterday, the Senate Committee on Economic Affairs (CAE) in Brazil approved a bill to regulate cryptocurrencies
- The legislation would govern everyday use of cryptocurrencies, define a virtual asset and set provisions for a VASP
Brazil has taken a concrete step toward regulating cryptocurrencies. According to an official statement released Tuesday, the Senate Committee on Economic Affairs (CAE) unanimously approved a legislative measure to regulate cryptocurrencies in the Latin American country.
The bill, labeled PL 3825/19, was drafted jointly by the Federal Revenue Service (RFB) and the Brazilian Securities and Exchange Commission (CVM). The proposal now moves to a Senate vote and, if approved there, to the Chamber of Deputies. If both houses pass it, the text will be submitted to President Jair Bolsonaro for signature into law.
Implications of the bill
The draft law would categorize crypto companies as “virtual asset service providers.” It would also limit the CVM’s authority over cryptocurrencies, with an exception for initial coin offering cases.
The government would decide which authority becomes the responsible regulator, although Senator Irajá Abreu has indicated the central bank is a likely candidate given its significant involvement in drafting the bill. Speaking to Bloomberg, the senator linked his expectation to the central bank’s prominent role in shaping the proposal.
He added that the bill’s focus on investments would foster a friendlier environment, making cryptocurrencies more likely to be used routinely.
“With regulation, cryptocurrency will become even more popular. Once this regulation is approved, the trend is that they will be increasingly adopted in supermarkets, retail, and car dealerships,” the senator said.
The law would require government authorization for any service provider wishing to operate under the new regime. The bill defines the different entities that provide services such as trading, custody, asset transfers and administration, meaning those providers would be subject to regulation.
Tax incentives and anti-money laundering measures
The legislation also specifies tax incentives: crypto companies that meet zero-carbon emission criteria could be exempt from taxes on purchases of hardware and software used for mining, processing and storing virtual assets. These tax incentives would last through December 2029.
Additionally, the bill includes measures to combat money laundering. All cryptocurrency firms would be required to report suspicious activities to Brazil’s anti-money laundering body, the Financial Activity Control Council (Coaf).
“The intention of the project is to curb or limit illegal practices, such as money laundering, tax evasion and many other crimes in this segment. There is a lawful, legal market that represents the vast majority, but there are also exceptions,” Senator Abreu said.