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The Economic Affairs Committee of the Brazilian Senate finally ratified legislation that outlines regulations for cryptocurrency funds on Tuesday (22nd of February), taking a big step towards regulating the state’s virtual currency industry.
According to Bloomberg News, if passed, the decision will make Brazil the biggest country in Latin America to legislate virtual currency. Before Jair Bolsonaro, President of Brazil, can pass the bill into law, it must be approved by both the Senators and the house of representatives.
The Senate’s full approval of PL 3825/19 is the first phase towards a bill that aims to establish guiding principles for the everyday use of crypto in monetary operations and investment purposes.
The proposal was spearheaded by Senator Flavio Arns in 2019 but crafted in collaboration with the securities exchange commission (CVM), the central bank, and the federal tax authority (RFB).
Contents Of The Bill
Under the bill, digital assets and crypto exchanges are defined and categorized, allowing the state government to decide which organization would regulate digital currency transactions. Senator Iraja Abreu, an advocate for the bill, told Bloomberg that he believes the central bank, who drafted the policy, would bear this obligation.
Crypto firms that offer digital asset services must comply with the bill’s requirements to deter fraudulent activities and concealing of assets while battling criminal networks, terror funding, and the spread of nuclear weapons.
Last year, the country’s lower chamber passed different legislation establishing rules for trading digital currencies in the country. The current rule, according to Abreu, creates a conducive atmosphere for more frequent crypto usage by focusing on investments rather than widespread usage.
“Under legalization, cryptocurrencies will grow in popularity,” Abreu forecasted. “Once this rule is authorized, it is expected to be used more in supermarkets, businesses, and automobile dealerships.”
Tax Incentives For Miners Of Cryptocurrency
Tax breaks for bitcoin miners are also included in the legislation. Import taxes, and other payment taxes that influence local deals, would be waived for businesses that purchase software and hardware for the mining of BTC and other cryptocurrencies. However, the tax benefits are only available to enterprises that utilize renewable sources of energy that are free of carbon.
The rule also mandates that companies inform prospective investors about the hazards connected with virtual assets. Consumers are also to complete an online exam to evaluate if they are aware of the risks before investing.
If the consumer passes the exam, they will be able to deposit approximately 600,000 rubles (over $7500) each year. If they don’t, the maximum they will be granted is 50,000 rubles ($626).
The voting took place on the same day that Russia’s Ministry Of Finance published a draft of the cryptocurrency regulatory law, which states that virtual currencies may only be used for investment purposes and not for payment.
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