Crypto Regulations in Brazil 2024 – Blockchain Innovative Country

Brazil has been a very fertile place for cryptocurrency and related industry. Until 2023, there was no specific regulatory framework to govern the crypto sector. Businesses which used to operate here were directly under the legal regime applicable to any asset adhering to the Brazilian Civil Code. The Brazilian Virtual Assets Law came into picture in 2022 and everything changed since then! 

In this chapter by Coinpedia, we will unfold the different regulations and laws applicable to the crypto industry in Brazil in 2024. 

How is Cryptocurrency Regulated in Brazil?

• In December 2022, Brazil published law no. 14,478 , defined as the legal framework for Virtual Assets in Brazil (Cryptoassets Act).
• In 2022, 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.
• In 2023, the regulation finally came into force which was also regarded as the first step to a broader sector-focused legislation.
• President Lula Da Silva signed a decree establishing the central bank as the primary supervisor of the crypto economy , a landmark for crypto regulatory innovation in Brazil.
• Since then, the Central bank has been monitoring and regulating all virtual asset providers in the country.
• The main aim is to prevent scams related to cryptocurrency in Brazil.
• The law also creates a new specialized crime for fraud using virtual assets. It will be charged with a penalty of two to six years of prison.
• It also requires the creation of licenses for virtual service providers for which companies and Crypto exchanges need to register.

What is Brazil’s Crypto Assets Act?

The Crypto Assets Act came into force on June 20, 2023. It deals with the guidelines for providing services with virtual assets and for regulating providers of these services. 

• It defines virtual assets as a digital representation of value that can be traded electronically and used for making payments or for investment.
• It provides for prior authorisation for the provision for services , the definition of virtual asset service provider services (VASP) and setting new criminal responsibilities in the operations of crypto assets.

Brazil and Cryptocurrency in 2024

• In 2014, a statement by the Central Bank of Brazil concerning crypto was discouraged because of operational risks.
• In 2017, it got unregulated and discouraged status was reiterated by the Central Bank of Brazil.
• In 2019, the Special Department of Federal Revenue of Brazil published a document on cryptocurrency taxes in the country.
• In December 2022, Brazil established a licensing procedure for virtual asset service providers with the aim of legalizing crypto as a payment method.
• Prior to 2023, Brazil’s crypto and virtual assets operated largely outside of any regulatory framework and under the more general Brazilian Civil Code.
• In June 2023, the advent of law no. 14,478/22, the Brazilian Virtual Assets Law, marked a new era in Brazilian crypto regulation.
• The Central Bank of Brazil emerged as the main authority overseeing the regulation and supervision of virtual asset services, with a focus on market stability and risk mitigation.

Taxation Policies

The Brazilian Senate approved new income-tax regulations that would require citizens to pay up to 15% on earnings from cryptocurrencies held on international exchanges. 

In November, 2023 , Bill 4173/2023, amendment of taxation law was adopted by the Brazilian Senate. According to the Bill, supposed to come into effect on January 1,2024, income from crypto assets over BRL 6’000 would be taxed at a rate of 15%. 

Conclusion

Bitcoin is not a legal tender in Brazil, but the country legalized cryptocurrency as a payment method throughout the country. It boosted the adoption of digital currencies since then. Brazil is considered as a progressive space for cryptocurrency since it offers a well regulated, safe environment for trading crypto.