Jair Bolsonaro, the president of Brazil who will leave office on December 31, has signed a bill aimed at legalizing the use of cryptocurrencies as a method of payment within the South American country.
In a December 22 publication in Brazil’s official federal government newspaper, Bolsonaro’s office said the president had signed bill 14,478 into law after approval by the country’s Chamber of Deputies. The legislature sent the bill to the president’s desk on November 29 as the final step toward recognizing cryptocurrency payments.
According to the text of the bill, residents of Brazil will not be able to use cryptocurrencies such as Bitcoin (BTC) as legal tender in the country, as is the case in El Salvador. However, the new law includes many digital currencies in the definition of legal means of payment in Brazil. It also established a licensing regime for virtual asset service providers and set penalties for digital asset fraud.
Bolsonaro’s announcement did not suggest which federal agency might be in charge of overseeing cryptocurrency payments. However, as in the United States, digital assets considered securities fall under the regulatory umbrella of the Brazilian Securities and Exchange Commission (CVM). The law also includes provisions that were likely made in response to the FTX collapse, requiring exchanges to distinguish between user and company assets.
The new law will take effect in 180 days, likely in June 2023. Bolsonaro will step down in a matter of days, after which Luiz Inácio Lula da Silva, or simply “Lula,” will assume the presidency on January 1. Lula was the president of Brazil from 2003 to 2010, and has previously made statements in favor of the adoption of cryptocurrencies and Blockchain technology.
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