bitcoin become legal brazil

This week, Brazil’s Senate approved a bill on cryptocurrencies during a plenary session, paving the way for official regulation of crypto in the world’s ninth-largest economy.

The bill needs approval from the Chamber of Deputies before it can be signed into law by President Jair Bolsonaro. This likely will not occur until later this year.

First introduced in 2015, the bill allows Brazil’s executive branch to create rules on virtual assets. The bill still needs to decide if Brazil’s central bank, Securities and Exchange Commission, or a brand-new body will regulate the industry.

Observers point out that if the bill moves ahead, the Brazilian economy will be the largest in Latin America offering a regulatory framework for virtual assets.

Other economic factors that countries considering bitcoin as legal tender should bear in mind, according to Salami, include the exposure of government revenues to exchange rate risk due to the huge volatility which has characterised bitcoin price.

Domestic prices could become highly unstable as central banks would not be able to use monetary policy to achieve stable price if bitcoin becomes widely used as legal tender.Dr Iwa Salami, University of East London

“Also, if widely used as domestic currency, central banks will not be able to effectively conduct monetary policy through the use of interest rates to steer their economies in the path of growth – since they cannot set interest rates on a foreign currency,” she adds.

Only half of the population in El Salvador has access to the internet, according to the latest data from the World Bank.

A second factor mentioned by Salami is the potential adverse effect that bitcoin adoption can have on domestic financial systems since banks and other financial institutions could be exposed to the massive fluctuations in bitcoin and other crypto-asset prices: “This has financial stability implications and could result in the potential crashing even of stock markets,” Salami adds.

These risks mean international financial bodies are not keen on countries adopting cryptocurrencies as legal tender.

For example, they would not say a bitcoin is worth EUR 41.673 but would make that comparison the other way around. Most people also don’t think about buying and selling USD or EUR like they do with BTC.”

Salami also warns about the use of bitcoin and other crypto-assets for money laundering, terrorism financing and tax evasion in countries with weak regulatory regimes.
“This could result in further significant risk to a country’s financial system, its fiscal balance and can also impact cross-border financial services,” she adds.

In 2018, the Venezuelan government created a cryptocurrency, petro, backed by its considerable oil, gold and diamond reserves.

Similarly, the International Monetary Fund (IMF) said that there are “macroeconomic, financial and legal issues” with the Central American adoption of the cryptocurrency, despite the Salvadorian finance minister originally saying that conversations with the IMF had been successful.

As fintech lawyer Willem Röell notes, bitcoin’s decentralised nature means that it is outside the control of central banks, so naturally the IMF and central banks are critical of its use as legal tender by countries.

“At the same time, taking into account its high volatility, one can question how much sense it makes to consider bitcoin legal tender when most people still (continuously) calculate back and forth between the value of their bitcoins and fiat currencies like the USD and EUR,” Röell told Tech Monitor.

“Real adopters use bitcoin in the same way as EUR.

American nation.

However, despite the advantages of financial inclusion and the cheaper cost of remittance associated with using bitcoin, there are legal and regulatory implications to its use as legal tender which countries, particularly emerging economies, need to be aware of, says Dr Iwa Salami, associate professor in law at the University of East London.

Firstly, legal tender status requires that a means of payment be widely accessible and as internet access and the technology needed to transfer bitcoin and other crypto-assets remains scarce in many countries, this may go against the argument of it really facilitating financial inclusion,” Salami says

One of the issues reported after the introduction of bitcoin as legal currency in El Salvador is that it is leaving big sections of its population that do not have the necessary digital access or skills behind.

As the popularity of Bitcoin rises, so does the adoption in different countries. We recently saw the Miami mayor announce that he will accept his next paycheck in 100% Bitcoin.
And now reports suggest that Brazil’s new law will allow workers to accept Bitcoin as their salary. This means Brazil is more or less on the verge of making Bitcoin their legal tender.

And if that happens, they will become the 2nd country to do so after El Salvador.

More about Bitcoin’s acceptance in Brazil

Reports suggest that new bills are being formulated to allow Bitcoin usage for all kinds of transactions in the country. The best part is that there would be no limits to these transactions, and one can buy a house, a car, or even a burger with Bitcoin.

This is similar to El Salvador, where BTC is legal tender and can be used to purchase anything.

Bitcoin’s environmental impact has come under scrutiny due to the huge amounts of electricity required for ‘mining’, or bringing new bitcoin into circulation. In May, Elon Musk tweeted that Tesla would be suspending bitcoin transactions for its vehicles because of its environmental impact, causing the cryptocurrency to fall by more than 10%.

According to the Cambridge Bitcoin Electricity Consumption Index, a tool created by the University of Cambridge to measure bitcoin’s electricity consumption and environmental impact, the cryptocurrency consumes more TWh per year than Finland or Kazakhstan alone.

However, the index also claims that there is little evidence to suggest that bitcoin contributes directly to climate change, even if it was entirely powered by coal, and that its environmental footprint remains marginal.

Brazil.

— Saori Honorato (@saorihonorato) October 4, 2021

In fact, Brazil’s Central Bank president Roberto Campos Neto said last week that his institution will first regulate cryptocurrencies as an investment and only afterwards as a means of payments due to overwhelming consumer demand for the investment use case, the Brazil Crypto Report said.

The bill, which was initially proposed by Ribeiro in 2015 and needs to be approved by deputies and the Senate before becoming law, proposes the regulation of cryptocurrency exchanges and businesses by requiring them to register with an as yet undetermined federal authority.

The bill would also increase the penalties for the use of cryptocurrencies for money laundering, scams and pyramid schemes, the latter having become common fraud in Brazil.

But with increased adoption and usage, Brazil will also tighten its crypto regulation to prevent wrong use of the currency.

For BTC to reach its full potential in Brazil, the bill must pass the chamber and get the needed votes. After that, it will also be tied to several laws that will impose fines and jail times in case of money laundering using crypto.

The fines would range from 33%-66% of the laundered money, and the jail time could be more than 16 years. This means if caught, practically, your money is almost gone, or an entire phase of your life is ruined.

Why do I think BTC is the future?

Bitcoin brings hope to nations that have smaller economies or are dependent on different countries for their currency.

For example, El Salvador was only dependent on the USD for their currency, but now they have BTC.

Reports broke this week that Brazil was poised to pass legislation recognising cryptocurrency bitcoin as legal tender. “Bitcoin will be currency in Brazil soon,” reported Livecoins, a Portuguese language crypto news website, quoting Brazil’s federal deputy Aureo Ribeiro as the source. Several bitcoin influencers echoed the ‘news’ on Twitter, and outlets such as Yahoo! Finance, Bitcoin News and Coin Rivet also picked it up.
On Monday, the number of bitcoin trades skyrocketed, perhaps in part due to the impact the announcement had made in the crypto community.

Brazil looking to legally recognize #crypto for payments https://t.co/9rRYkj185Z

— Lark Davis (@TheCryptoLark) October 4, 2021

The reports turned out to be inaccurate, however.

Ribeiro was quoted in Livecoins.Data, insights and analysis delivered to youView all newslettersBy The Tech Monitor teamSign up to our newslettersSign up here

As Saori Honorato, a journalist at Portal do Bitcoin, noted on Twitter in an attempt to stop the spread of the false information, Ribeiro was expressing his personal opinion rather than affirming that the bill will make bitcoin or any other cryptocurrency legal tender in Brazil.

What does Brazil’s crypto bill actually say?

Contrary to the rumours circulating online, what Brazil’s ‘Bitcoin bill’ is proposing is the regulation of cryptocurrencies – not the establishment of bitcoin as legal tender, something that is not mentioned anywhere in the proposed legislation.

1) First of all, the bill DOES NOT make any mention of bitcoin becoming a legal tender in Brazil.

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