Cryptocurrency Regulations in Brazil – Blockchain Innovative Country

The crypto implementation in Brazil would see Latin America’s largest country join others setting clear guidelines and rules governing the emerging asset class. Lawmakers of Brazil will vote on a bill to regulate the crypto market in the country. The bill further defines what are virtual assets and outlines the responsibilities of crypto service providers. 

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Brazil formally called ‘The Federative Republic of Brazil’ is the largest country in South America and Latin America is one of the largest democracies in the world. Brazil is always known to catch up with tech trends, follow the real and stick to it. The Central bank is also very supportive of blockchain innovations.

Brazil trades about 100000 Bitcoins every day which has a market share of 36% with approximately 4,00,000 registered users and 1.4 million have their accounts.

Brazil Crypto Regulations 2022

19-04-2022: Latin American Crypto Exchange Bitso Hires New Brazil Chief.

Latin American crypto exchange Bitso has named Thales Araujo de Freitas country manager of its Brazil operation, announced by the company on Monday.Bitso wants to become the largest crypto exchange in Brazil by the end of 2022 company told Coindesk recently.  

18-04-2022: The Central Bank of Brazil declares a pilot test.

The Central Bank of Brazil has announced that it is planning to conduct a pilot test to establish its planned central bank digital currency (CDBC), the real digital currency. Roberto Campos Neto, the bank’s president also claimed to involve a fixed supply of the described token that the pilot is going to carry out through the last six months of 2022.

17-04-2022: Brazil pushes for cryptocurrency adoption.

Lawmakers in Brazil pushed to advance a bill that would legalize and regulate crypto- the National Congress of Brazil’s House bill 4401/21 this week. Senator Iraja Abreu sponsored a Senate version of the bill in favor of the house bill, carrying some provisions over 4401-21.

17-04-2022: Owner of Brazil’s largest crypto exchange plans to launch Quantitative Trading Service.

Brazil’s largest Crypto exchange by market valuation, the holding company for Mercado Bitcoin, plans to launch a crypto asset manager focused on quantitative trading. Reported to Infomoney Brazilian financial media outlet on Thursday.  

14-04-2022: Brazil Senate announces Incoming approval of Bitcoin Law.

Crypto sector is going to be subject to regulation in Brazil soon. The regulatory bill of Crypto in the biggest Latin American country cleared the crucial legislative phase on feb 22 after the approval of the Senate’s Economic Affairs Committee. Senato Flavio Arms has been working on it since 2019 and later joined forces with the Central Bank securities exchange commission along with Brazil’s federal tax authority.

Government’s Approach to Cryptocurrencies

Brazil’s Senate made its very first step towards the country’s crypto market with the economic affairs committee unanimously approving a bill to create rules for digital currency funds. Brazil would become the largest Latin American Nation to regulate cryptocurrency if the bill gets approved. the legislation needs adoption by full Senate and lower house before the president of Brazil Jair Bolsonaro signs it into law.

The bill states that virtual assets and classifies their service providers determined by federal government authority by which body will regulate business with crypto. Further, under the bill, virtual asset service providers must prevent money laundering, asset concealment, terror financing, and the proliferation of weapons of mass destruction.

Crypto acceptance as a legal tender in Brazil comes with a host of new regulations and oversight. Brazil’s authorities are introducing a bill to allow Bitcoin in all the transactions of small and large businesses. That bill would be further introduced to the Plenary of the Chamber of Deputies in the next few days by Federal Deputy Aureo Ribiero. by this asset one would be able to buy a house, a car, and buy a hamburger from McDonald’s as it is treated as a currency in the country as it is in other countries. 

Brazil allows the tax payment using cryptocurrency starting in 2023, announced by Rio de Janeiro by this it will become the first city to allow payment of tax using crypto. The payments will be immediately converted to Brazilian reais through the company. 

There are no specific laws or regulations applicable to cryptocurrency in Brazil, all exchanges come under the purview of Normative Instruction No. 1888 issued by the Department of Federal Revenue. According to this, all companies that carry out crypto transactions in Brazil must report to them, or else face fines ranging from 500BRD to 1500BRD ( $120 to $360).

Crypto Taxation in Brazil

There are no specific provisions regarding cryptocurrency in Brazil, Brazilian tax laws follow generally applicable rules for movable goods whereas crypto-assets represent valuable property rights. Virtual assets holdings must be declared in income tax statements by holders subject to capital gains arising from sales. 

Gains limited to BRL 30,000 per month levie under no tax, capital gains under BRL 5 million falls under 15% tax, and gains over BRL 30 million falls under the tax rate of 22.5%. Estate or Inheritance tax on goods, assets, or other rights is considered between the tax rate of 2% and 8% according to the Deceased’s resident state.

Cryptocurrency Mining in Brazil

Brazil’s securities regulators have suspended the activities of a bitcoin mining operation. With the rise in unemployment and economic uncertainty in wake of the covid crisis, a growing number of Brazilians are finding an alternative source of income in cryptocurrency mining. HOme crypto mining spikes in Brazil, 

GPU rigs have been spotted in favelas as relatively small investments can also return more than the average salary of an individual in Brazil. A surge in hardware imports and electricity consumption has confirmed the mining spike trend in Brazil. 

Historical Events & Announcements

06-05-2020:– Brazilian President Bolsonaro is under investigation by Brazilian prosecutors on the charge of being guilty of violating the Brazilian Constitution. The Brazilian army had developed blockchain software to track the arms and other weapons to keep them under their control which was shut by the president. But the prosecutors have held him responsible.

24-02-2020:- Brazil’s Central Bank Announced New Instant Payment to combat the cryptocurrencies which will be rolled out in November.

15-02-2020:- Due to the strict laws on taxes which demanded the companies to maintain every user data and report all the transactions, two exchanges faced a severe downfall in the trading volume and were forced to shut down.

20-01-2020:- The Brazilian CVM announced the launch of a regulatory Sandbox containing specific guidelines for cryptocurrency and digital token issuance.

11-01-2020:- A commercial bank called Banco Bradesco Has shunned an agreement which prevented the closure of any cryptocurrency exchange accounts as it believed cryptos could present the risks of money laundering.

01-08-2019:- The Brazilian tax authority requires the cryptocurrency companies to report transactions as set forward in Normative Instruction RFB 1,888/2019. Failing to which could result in fines.

22-01-2018:- Brazilian security exchange commission CVM determined digital currency Niobium Coin (NBC) as a non-financial asset. It has been classified as utility tokens and therefore not subjected under CVM regulations.

19-11-2015:– Brazil’s House of Representatives held a public hearing to discuss a bill that would 

give the country’s central bank oversight of digital currency activities in the country.

07-04-2014:- Brazilian Tax authorities require bitcoin holders to report bitcoin holdings and payment of capital gains tax over a certain value.

19-02-2014:- The Central Bank of Brazil does not recognize cryptocurrencies as legal tenders or electronic currency under Brazilian Law. It also issued a warning that the currencies are not authorized and not issued by a central authority. The bank also said it was following the evolution of virtual currencies and would consider adopting measures.

Conclusion 

Crypto’s legal nature is a polemical matter worldwide, not just in Brazil. as reflected in Bill 2,303/2015 the Brazilian Judicial Branch has expressed its understanding of the issue. Cryptocurrencies may not be legally defined as a currency despite their name as they do not fall under the terms of Law 9,069/95 and of Decree-Law 857/69, maybe also denied as a means of payment.

Brazil has enormous demand within the country and huge amounts of bitcoins are traded every day. The government has also seemed to be progressive with respect to cryptocurrencies by studying and researching cryptocurrencies and their activities. Hence it would be good for the cryptocurrency’s future in Brazil if the government will successfully complete all the pending works on regulations.