The cryptocurrency law, which has been under discussion for several months, was approved by Brazil’s House of Representatives after shedding some changes proposed by the Senate. The proposal leaves out two proposed tax exemptions for greenfield mining operations and the separation of customer assets from company funds for virtual assets service providers (VASPs).
Cryptocurrency law has finally been approved in Brazil
Cryptocurrency law project identified with number 4.041/2021, approved in the session of the House of Representatives on November 29, the legal project, whose discussion and approval was realized last month due to the general election, was postponed several times, will now be. The law must be approved by President Jair Bolsonaro before it can be promulgated.
Representatives voted to gut most of the Senate’s proposed changes, allowing the bill to pass in its entirety and allowing more specific legislation to be drafted later. Deputy Expedito Neto, the correspondent of the decree, emphasized the importance of this law for the country. And so he said.
We are voting on a historic issue. Today, the country is ahead of others when it comes to controlling movement in digital assets. We have the support of the current government and the future government.
According to local media reports, the discussion of the law has been accelerated by the unknown position of the president Luiz Inacio Lula da Silva on the matter, some representatives have said that the decree may find opposition with the new government. It is slated to open on January 1.
Separation of assets and other elements are left out.
One remaining issue in the final document is the proposed tax cuts for cryptocurrency mining industries that use green energy in their operations. The project reporter felt that tax-related regulation regarding this issue should be defined in another bill.
Another challenge is the issue of client asset segregation, which forces virtual asset providers to separate client funds from their own funds. This was one of the focal points of the discussion, with many representatives supporting users to avoid financial losses, such as those that occurred in the recent collapse of leading crypto exchange FTX.
The anti-diversity side won out, with analysts saying that not using clients’ money for services could limit the portfolios that brokerage firms and other companies in the area can offer, limiting them to offering location-based trading products. For now, the regulation of these products and what kind of guarantees these companies have to offer to their consumers needs to be defined by the regulator.
Implications for the future
The approval of the cryptocurrency law is now a starting point for the regulation of VASPs and other companies, companies that use crypto in the country, which will be controlled by a regulator appointed by the Central Bank of Brazil or possibly the executive. Another different institution.
Many analysts believe that this is only the first stage of this regulation, and expect that the implementation of the law and the rise of certain laws will begin to take effect in the coming years. This is the opinion of Isaac Costa, a partner at Warde Advogados.
It will probably take up to two years for the law to have any practical effect, which leads me to believe that its passage is merely symbolic.
This is because the bill was passed with very general guidelines, which should be further developed in future bills. But, according to digital law attorney Marcelo Castro, the bill establishes a foundation that will serve to “subsidize future infringement regulation.”
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