Last Updated: 1 December 2022
Brazil legalises crypto currency as a means of payment. Residents can pay with bitcoin for goods and services. But there is an important nuance: bitcoin and other crypto currencies are not legal tender, as is the case in El Salvador, for instance. For example, you are not yet allowed to pay your taxes with it.
Bitcoin legal tender
Brazil’s Chamber of Deputies has approved a regulatory framework that legalises the use of cryptocurrencies as a means of payment in the country, Decrypt reports.
The legal guidelines are set out in this government document. Virtual currencies are included in the definition of “payment agreements” and are now under central bank supervision in the country of 214 million people. The law is already fully approved, requiring only a signature from the president.
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The country is considered one of the countries where there has been strong adoption of cryptocurrencies for years. For instance, there are the most traded exchange-traded funds (ETFs) in Latin America, funds that have exposure to bitcoin or other currencies. There are also plenty of regulated ‘on-ramps’ in the form of banks and pure cryptobrokers.
Supervision will presumably be in the hands of the central bank and CVM, the Brazilian equivalent of the Netherlands’ Financial Markets Authority (AFM) or America’s Securities & Exchange Commission (SEC). The CVM will presumably oversee coins categorised as securities. Indeed, the country plans to divide crypto assets into three categories. In which bitcoin falls under payment tokens, the first category.
The use of crypto currencies is not without risk, as the recent FTX drama once again demonstrated. Companies with crypto assets on their balance sheets have to comply with strict accounting regulations, as well as anti-money laundering rules such as reporting suspicious transactions and above a certain amount.