The Brazilian government is planning to introduce a new decree that will make changes to the rules established under the Bitcoin Law that was approved by former president Jair Bolsonaro in November 2022. This move aligns with recent actions taken by the newly elected President Lula da Silva, who has already signed a number of decrees and measures aimed at altering policies put in place by the previous administration.
As part of these efforts, Lula da Silva’s administration is currently developing fresh proposals to regulate the cryptocurrency sector and provide greater clarity around existing crypto legislation. Local reports suggest that the government has assembled a large team to oversee the regulatory process, which includes the involvement of key officials such as Gabriel Galípolo, the executive secretary of the Ministry of Finance, and Marcos Pinto, the secretary of economic reforms.
Moreover, the Brazilian Central Bank (BC) and the Brazilian Securities and Exchange Commission (CVM) are providing technical support for the regulatory process. Initially, the plan was to submit the decree to the Presidency of the Republic, also known as Casa Civil, at the start of February. However, the deadline was pushed back.
The cryptocurrency community in the country and abroad is eagerly anticipating the issuance of the new decree, with particular attention being paid to the entity that will serve as the primary regulator of the Bitcoin ecosystem.
Initially, it was suggested that the Central Bank would be responsible for regulating the cryptocurrency sector, but recent criticisms from President Lula da Silva directed towards the institution have raised doubts. Last month, the Brazilian president questioned whether the Central Bank’s autonomy served the country’s national interests. Although he later appeared to backtrack on his comments, he suggested that he would review the bank’s independence to make decisions from 2021.
The primary focus of the new regulations will be to establish new rules governing various aspects of the crypto industry, with the expectation that the decree will clarify existing laws related to the crypto industry in Brazil. One proposed law that has generated much debate concerns the requirements for crypto exchanges and brokers to segregate their assets.
This measure has been discussed by lawmakers and proposes that crypto asset brokers keep their funds separate from clients’ deposits. Advocates of this regulation believe that it would prevent users’ cryptocurrencies from being mixed with the operations of exchanges and other service providers, as occurred in the FTX collapse where users could not withdraw their funds due to harmful trading activities by the exchange.
Although the proposal was initially approved when the bill passed the Senate, it was later invalidated due to disagreements among the legislators in the Chamber of Deputies. Nonetheless, it is expected to be an important element of the proposed Bitcoin decree.
Brazil is widely regarded as one of the countries with the most extensive use of cryptocurrencies. In November of last year, it took a significant step by recognizing Bitcoin as a medium of payment and an investment asset.
