Text by Pyr Marcondes, Senior Partner at Pipeline Capital.
This Tuesday, the 29th, the Chamber approved a bill that regulates the cryptocurrency sector in Brazil.
As duly recorded by Exame, and the business media in general this week, PL 4401/2021, the pioneering crypto law in Brazil, which had already been approved in the Senate, has now been approved by the Chamber, and is heading for presidential sanction, and may enter into force 180 days after its publication.
This is a (positive) milestone for the country’s economy.
The main objective of the PL is to create a legal apparatus to combat the practice of crimes with crypto-assets, including money laundering, in the search for mechanisms to protect investors.
But the law, in its final text, ends up also legislating on the use of crypto assets in the country, establishing that a virtual asset is now considered a “digital representation of value, which can be negotiated or transferred by electronic means and used to carry out payments or for investment purposes”, says the text.
This paragraph is, for the country’s digital financial future, transformative.
The bill regulates the establishment and operation of cryptocurrency service providers in Brazil, defining such entities as those that provide trading, transfer, custody, administration or sale of cryptocurrencies on behalf of third parties. Cryptocurrency service providers will only be able to operate in the country after express authorization from the federal government.
The expectation is that the Central Bank of Brazil will be responsible when crypto assets are used as a means of payment, while the Securities Commission (CVM) will be responsible when they are used as investment assets. Both BC and CVM, along with the Federal Revenue, contributed with legislators to draft the new legislation.
According to data from market surveys, there is now a tendency in the country, not exactly captured on the surface, that Brazil is currently a very active market in the trading of currencies such as bitcoin, which currently appear to be on the radar of investors as an alternative to traditional stock market.
Now, the country seeks to prepare the ground for this to translate into a more frank and open daily use in financial transactions.
The recent episodes of misuse and abuse of blockchain crypto platforms in the US, with the collapse of a number of exchanges in the sector, made it clear that the regulation of these operations is indispensable and urgent. PL has this objective and this merit.
But as I mentioned, although it still does not recognize cryptoassets as official currencies in the Brazilian economy, the law already recognizes them as financial assets for payments and investments, which is already a considerable opening for the activation of this incipient, but certainly promising, application market. In fact, digital transactions through cryptoactivated systems on top of the blockchain should be mainstream in a short time. Here and everywhere.
We are living in a kind of digital Stone Age of an industry in formation.
Changes like this point to a decentralized economy, with more fluid international financial flows, in addition to gradually opening the doors to investors of all types and sizes, also gradually breaking the concentration of the financial sector in the hands of only large and experienced players.
Everything starts at the beginning. And this PL is the beginning of the dissemination of crypto in the country.
Text by Pyr Marcondes, Senior Partner at Pipeline Capital.
Text originally published by Exame.
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