The Brazilian government is set to issue a decree that modifies some of the rules established in the Bitcoin Law approved in November 2022 by former president Jair Bolsonaro. This move comes in line with recent developments taken by President Lula da Silva in recent weeks.
Brazil Faces New Crypto Regulations
With barely a month in office, the new president has stamped his authority by signing a series of decrees and measures to change what the previous government established.
Lula’s team is now working on new proposals to regulate the cryptocurrency sector and clarify existing crypto laws. According to local reports, the government has formed an extensive group to oversee the regulation, including the executive secretary of the Ministry of Finance, Gabriel Galípolo, and the secretary of economic reforms, Marcos Pinto.
In addition, the regulation has the technical support of the Central Bank (BC) and the Brazilian Securities and Exchange Commission (CVM). The initial expectation was that the decree would be sent at the beginning of February to the Presidency of the Republic known as Casa Civil, but this was postponed.
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Meanwhile, the cryptocurrency industry is waiting for the decree, probably with more attention on the institution that will be the primary regulator of the Bitcoin ecosystem. Previously, it had been mentioned that the Central Bank would be the entity in charge of regulating the cryptocurrency sector. However, Lula’s recent attacks against the financial institution have cast some doubts.
Last month, the president of Brazil questioned whether the autonomy of the Central Bank served the national interest. Although he later seemed to retract it, he indicated that he would review its independence to make decisions from 2021.
What Changes Are Contemplated For The Brazilian Bitcoin Law?
The core focus of the new regulations would be drafting new rules regarding different facets of the crypto industry. There are expectations that the new decree would clarify the laws regulating the crypto industry in Brazil.
A proposed law that has widely been debated is the requirements of crypto exchanges and brokers to segregate their assets. This measure has been the subject of discussions by lawmakers and proposes that crypto asset brokers separate their funds from clients’ deposits.
Proponents of the regulation believe that it would prevent users’ cryptocurrencies from being mixed into the operation of exchanges and other service providers. The collapse of FTX is cited as a significant factor where users could not withdraw their funds due to harmful trading activities from the exchange.
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The proposal was initially approved when the bill passed the Senate but was later annulled because it divided the legislators of the Chamber of Deputies. However, it is expected to be a vital component of the proposed Bitcoin decree.
Brazil is regarded as one of the nations with widespread crypto use. Last November, it took a significant step when it recognized Bitcoin as a medium of payment and even an investment asset.
The leading cryptocurrency is currently trading at around $24,500 as of the time of writing.
-Featured image from Shutterstock and Charts from TradingView.com