Brazil to Implement Cryptocurrency Regulations and Establish Itself as an Innovative Blockchain Country by 2024
Brazil has emerged as a fertile ground for the cryptocurrency industry, with a lack of specific regulations until 2023. Previously, businesses operated within the legal framework of the Brazilian Civil Code. However, everything changed with the introduction of the Brazilian Virtual Assets Law in 2022.
In this chapter by Coinpedia, we will explore the various regulations and laws that apply to the crypto industry in Brazil in 2024.
How is Cryptocurrency Regulated in Brazil?
In December 2022, Brazil enacted law no. 14,478, which established the legal framework for Virtual Assets in the country, also known as the Cryptoassets Act.
In 2022, Brazilian lawmakers pushed for a bill to legalize and regulate cryptocurrencies. The National Congress of Brazil’s House bill 4401/21 was introduced, and Senator Iraja Abreu sponsored a Senate version of the bill, incorporating certain provisions from 4401-21.
In 2023, the regulations finally came into effect, marking the first step towards comprehensive sector-focused legislation.
President Lula Da Silva signed a decree designating the central bank as the primary regulator of the crypto economy, a significant milestone in Brazil’s crypto regulatory landscape.
Since then, the central bank has been monitoring and regulating all virtual asset providers in the country, with the primary goal of preventing cryptocurrency-related scams.
The law also introduces a new specialized crime for fraud involving virtual assets, punishable by imprisonment for two to six years.
It also mandates the creation of licenses for virtual service providers, requiring companies and crypto exchanges to register.
What is Brazil’s Crypto Assets Act?
The Crypto Assets Act, which came into effect on June 20, 2023, outlines the guidelines for providing services with virtual assets and regulates the providers of these services.
It defines virtual assets as digital representations of value that can be electronically traded and used for payments or investments.
The act requires prior authorization for service provision, provides a definition of virtual asset service providers (VASPs), and establishes new criminal responsibilities in crypto asset operations.
Brazil and Cryptocurrency in 2024
In 2014, the Central Bank of Brazil expressed concerns about the operational risks associated with cryptocurrencies.
In 2017, cryptocurrencies remained unregulated and the Central Bank of Brazil reiterated its discouragement.
In 2019, the Special Department of Federal Revenue of Brazil published a document on cryptocurrency taxes in the country.
In December 2022, Brazil introduced a licensing procedure for virtual asset service providers, aiming to legalize cryptocurrencies as a form of payment.
Prior to 2023, Brazil’s crypto and virtual assets operated largely outside of any regulatory framework, falling under the more general Brazilian Civil Code.
The advent of law no. 14,478/22, the Brazilian Virtual Assets Law, in June 2023 marked a new era in Brazilian crypto regulation.
The Central Bank of Brazil emerged as the main authority overseeing the regulation and supervision of virtual asset services, with a focus on market stability and risk mitigation.
Taxation Policies
The Brazilian Senate approved new income tax regulations that would require citizens to pay up to 15% on earnings from cryptocurrencies held on international exchanges.
In November 2023, Bill 4173/2023, an amendment to the taxation law, was adopted by the Brazilian Senate. According to the Bill, which is set to take effect on January 1, 2024, income from crypto assets exceeding BRL 6,000 would be taxed at a rate of 15%.
Conclusion
While Bitcoin is not considered legal tender in Brazil, the country has legalized cryptocurrency as a payment method nationwide. This has led to increased adoption of digital currencies. Brazil is seen as a progressive space for cryptocurrency, offering a well-regulated and secure environment for crypto trading.