According to the federal government’s official journal, Brazilian President Jair Bolsonaro signed a measure into law on Thursday morning that sets a comprehensive regulatory framework for the trading and usage of bitcoin in the country (DOU).
President Bolsonaro signed the law passed by Congress with no changes. According to previous reports, the new rules acknowledge bitcoin as a digital representation of value that can be used as a means of payment and an investment instrument in the South American country.
A virtual asset is defined as “a digital representation of value that may be negotiated or transferred electronically and utilized for payments or as an investment,” according to the bill’s language.
The new law, which takes effect 180 days after its signing today, does not make bitcoin or any other cryptocurrency legal cash in the country. Regardless, the legitimacy bestowed upon BTC’s use case as payment is significant and has the potential to stimulate additional activity in the country. However, the extent to which this occurs is determined by the activities of the regulator in charge.
The executive branch will appoint the government entities in charge of overseeing the market. When bitcoin is utilized as a payment method, the Central Bank of Brazil (BCB) is expected to be in charge, while the country’s securities and exchange commission (CVM) would be the watchdog. The BCB and CVM, as well as the federal tax authority (RFB), assisted parliamentarians in crafting the overhaul legislation.
The outlook is not promising if the BCB is certified as the sector’s watchdog. While the regulator cannot overrule the law’s definition of a virtual asset, there is little reason to expect that the BCB will go out of its way to encourage increased acceptance of bitcoin as a payment method. Its President, Roberto Campos Neto, has stated numerous times that he does not consider cryptocurrencies as a viable alternative to fiat payments, citing mostly volatility as the reason. More crucially, the BCB is developing its own digital currency, the Real Digital, which is set to go live in 2024.
However, the increased regulatory certainty provided by the Act encourages firms to investigate the emerging payment option further. This, in turn, may lead to greater widespread adoption of bitcoin as a medium of trade in Brazil, regardless of whether the BCB actively endorses it or not.