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Brazilian Cryptocurrency Law Likely To Be Reviewed By Lula’s Government

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Brazilian Cryptocurrency Law Likely To Be Reviewed By Lula’s Government

The recently approved Brazilian cryptocurrency law will likely be reviewed and revised by the newly inaugurated government of Luis Inacio “Lula” Da Silva. According to statements made by the former rapporteur of the law, Expedito Netto, the new government will likely review the law to include some issues that were left behind for its approval.

Brazilian Crypto Law Still Not Final, Former Rapporteur States

The recently sanctioned Brazilian cryptocurrency law will likely be reviewed by the newly appointed congress of the country, according to statements made by its former rapporteur, deputy Expeditto Netto. Netto explained that the changes proposed in the law are not definitive yet, as the project might go into discussion once again to review some of the issues left behind for the sake of its approval.

For Netto, who was not chosen as a deputy again in the general ballot that was held last year, there are still key issues that need to be discussed and included in the law. One of these was whether to force virtual assets service providers to segregate user funds from their own funds or not. The issue was finally left out, as analysts explained that forcing this on companies in the sector could affect the products they could offer due to capital constraints.

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However, there is international pressure for constraints of this kind to be exerted on cryptocurrency exchanges after what happened with FTX, one of the biggest cryptocurrency exchanges in the world, when it filed for bankruptcy in November.

Other less controversial topics were also left out, like tax discounts for green mining operations.

Benefits of the Law

The law does bring changes that, according to analysts, will be able to help customers feel more secure while investing in cryptocurrency assets. The Central Bank of Brazil became the organization in charge of monitoring and registering exchanges and custody institutions in the country. Also, the legislation gives room for the Brazilian Securities Commission (CVM) to intervene in portfolio offerings coming from these exchanges, restricting the ones considered illegal.

Another touted benefit of the law is that it aims to directly criminalize cryptocurrency scams, establishing penalties for the people behind them.

However, experts have expressed their dissatisfaction with the state in which the law was approved, saying that while this is indeed a good start, there needs to be additional regulation to extend what has already been established in the law.

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What do you think about the possibility of the government rehashing the recently approved Brazilian cryptocurrency law? Tell us in the comments section below.

Sergio Goschenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late to the game, entering the cryptosphere when the price rise happened during December 2017. Having a computer engineering background, living in Venezuela, and being impacted by the cryptocurrency boom at a social level, he offers a different point of view about crypto success and how it helps the unbanked and underserved.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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4.041/2021

Cryptocurrency Law Approved In Brazil — Green Mining Tax Exemptions And Asset Segregation Issues Left Out

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Cryptocurrency Law Approved In Brazil — Green Mining Tax Exemptions And Asset Segregation Issues Left Out

A cryptocurrency law, which had been in discussion for several months, has been approved by the Chamber of Deputies in Brazil after having shed some of the changes presented by the Senate. The proposal left out two planned tax exemptions for green mining operations and the issue of segregating customer assets from company funds for virtual assets service providers (VASPs).

Cryptocurrency Law Finally Approved in Brazil

The cryptocurrency law project identified with the number 4.041/2021, was approved by the Chamber of Deputies in its session on Nov. 29. The law project, whose discussion and approval were postponed several times due to the general elections realized last month, will now have to be ratified by president Jair Bolsonaro, who must sanction it before declaring it law.

Deputies voted to shed most of the changes that the Senate had proposed, allowing the law to be approved in a more general form, and providing the opportunity for more specific rules to be formulated later. Deputy Expeditto Neto, the rapporteur of the bill, remarked on the importance that this law has for the country. He stated:

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We are voting on a historic matter. Today, the country is ahead of others when it regulates activity with digital assets. We have the support of the current government and the future government for the matter.

Per local media reports, the discussion of the law was rushed due to the unknown stance that the government of president-elect Luis Inacio Lula Da Silva would have on the matter, with some deputies claiming that the bill might find resistance with the new government, which is slated to be inaugurated on January 1.

Asset Segregation and Other Elements Left Out

An issue that was left out of the final document was the tax cut proposed to be applied to cryptocurrency mining industries that used green energy in their operations. The rapporteur of the project recognized that tax-related regulation should be defined in another bill regarding this matter.

Another challenge was the issue of customer asset segregation, which would force virtual asset service providers to separate customers’ funds from their own funds. This was one of the focal points of the discussion, with many deputies supporting it to allow users to avoid loss of funds such as occurred in the recent collapse of leading crypto exchange FTX.

The anti-segregation side prevailed, with analysts stating that not leveraging customer funds to operate might limit the portfolio that brokerage firms and other companies in the area could offer, limiting them to offering spot-based trading products. For now, the regulation of these products and what kind of warranties these firms should offer their users will have to be defined by the regulator on a case-by-case basis.

Implications for the Future

The approval of the cryptocurrency law marks a starting point for the regulation of VASPs and other companies that use crypto in the country, which will now have oversight by a regulator that will be appointed by the executive, which can be the Central Bank of Brazil or another specific institution.

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Many analysts believe this is just the initial phase of this regulation, and expect the application of the law, and the rise of specific rules, to begin being implemented in the coming years. This is the opinion of Isac Costa, partner at Warde Advogados, who declared:

Perhaps the law will take up to two years to have any practical effect, which leads me to believe that its approval is a merely symbolic act.

This is because the bill was approved with very general directives, that will have to be further developed in subsequent bills. However, according to Marcelo Castro, a lawyer in digital law, the bill establishes a base that will serve to “provide subsidy for future infra-legal regulation.”

Tags in this story

What do you think about the recent approval of the cryptocurrency law in Brazil? Tell us in the comments section below.

Sergio Goschenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late to the game, entering the cryptosphere when the price rise happened during December 2017. Having a computer engineering background, living in Venezuela, and being impacted by the cryptocurrency boom at a social level, he offers a different point of view about crypto success and how it helps the unbanked and underserved.

Advertisement
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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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