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Crypto Regulation

The reaction of Febraban and the Brazilian market to the bill to regulate cryptocurrencies in Brazil

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Last week, the first bill aimed at regulating the cryptocurrency market in Brazil was advanced by a special committee of the Chamber of Deputies, with the next step being voted in the Plenary. O Bitcoin Portal spoke with some specialists and entities to find out how the expectation for possible legislation has been.

Bill 2303/15 is authored by federal deputy Aureo (Solidariedade-RJ). The text approved by the commission is quite different from the one created in 2015. In the original, cryptocurrencies and mileage were placed in the same basket, something that has now been undone.

In the PL that goes to the Plenary, it is determined that service providers of virtual assets “may only operate in the country upon prior registration, and authorization from an agency or entity of the Federal Public Administration may be required to be indicated in an act of the Executive Power”.

The measure focuses on a very sensitive point in the market: companies and exchanges that operate in Brazil, but have no legal registration in the country.

Febraban supports regulatory framework for cryptocurrencies

The Brazilian Federation of Banks (Febraban) responded to the request for analysis with an open response, stating that the cryptocurrency market needs regulation, but without going into details of the PLs that are being processed.

“The cryptocurrency market is currently on the fringes of a regulatory framework. The Financial Action Group against Money Laundering and Terrorism Financing (Gafi), in which Brazil participates, recommends regulation. Febraban understands that the regulation that disciplines the operations and market of cryptoactives in Brazil is an issue that must be deepened, especially so that the complete absence of regulation does not give rise to financial offenses, such as money laundering. Any measure in this regard should provide operators in this market with more responsibilities and duties towards regulators and control bodies”, said the entity.

The Brazilian Association of Cryptoeconomics (ABcripto) was also contacted by the report, but chose not to comment.

the brokers

The Foxbit exchange claims that some regulation is needed, but that the problem lies in the dosage. Victor Henrique Martins Gomes, the company’s legal and Compliance director, points out that the prior registration and authorization to operate by virtual asset service providers is a “consensus” among the various bills and that it is a “natural and acceptable move”. ”.

“If we analyze other jurisdictions, such as Ireland, we see that it is a natural and acceptable move, as long as it establishes minimum objective compliance criteria, is agile, online and accessible to everyone, as are the cryptoactives and associated technologies”, said Gomes to Bitcoin Portal.

The legal director emphasizes that the main Brazilian exchanges already follow all Brazilian regulations as they are established in Brazil, this includes, but is not limited to, the Consumer Protection Code, Tax Law and Criminal Law. But he remembers that a system that was born in a “disruptive and ‘no rules’ environment will never manage to live in an over-regulated world”.

“It is acceptable for such rules to accompany the technology and update themselves, such as, for example, a more severe penalty for individuals who commit fraud with cryptoactives or encourage financial pyramids. Or, adaptation to the Compliance rules for exchanges, P2P and arbitrators. Anyway, nothing that brings a lot of bureaucracy in order to suffocate the market, causing migration to friendlier jurisdictions”, analyzes the director of Foxbit.

Wanted, the Bitcoin Market chose not to manifest itself.

Protection that does not impair

Professor Isac Costa, a former CVM analyst, explained in a conversation with the Bitcoin Portal that the bills being discussed in Congress are not intended to generically equate cryptoactives to securities (for example, shares and debentures) .

For the expert, the objective of lawmakers should be to provide greater legal certainty to relationships and enable the inspection of activities. To achieve this, “it is necessary not to regulate the cryptoactive itself, but the service providers, their conduct, prohibitions and responsibilities”, he explains.

“It is not enough to simply place these providers in one of the existing categories (financial institution, payment institution, broker, stock exchange, counter etc.). It is necessary to create a flexible regime that, at the same time, provides investor protection with transparency and equitable treatment, makes it possible for the State and all interested parties to obtain information, but does not make economic activity unfeasible with the imposition of disproportionate regulatory costs “, it says.

The former CVM analyst concludes by pointing out that finding this balance “requires dialogue between State and market, without entrenchment and political will”, in order to develop cryptoeconomy in the country.

Bitcoin is already legal in Brazil

Soon after the project was approved by the special commission, deputy Aureo gave an interview to the Radio of the Chamber of Deputies that confused more than clarified. The congressman starts by saying that Brazilians will be able to buy small things like snacks with bitcoins.

This suggests that this is currently not possible. Bitcoin is legal in Brazil and can be used as a means of payment, as long as the person selling the product or service accepts it. It is also understood that the BTC would be an official currency (“it will be a currency”), which is not in the bill.

Aureo also says: “We debated a few years there to reach a text that recognizes this asset, which allows the transaction of this asset in our country, and which will be regulated by a government agency.” Again, understand that trading with bitcoin is prohibited, which it is not.

Brazilian law follows the principle that what is not prohibited is allowed (like many other democracies).

Not only that, the Federal Revenue’s Normative Instruction 1888, of 2019, has already established that the purchase and sale of crop-currencies is legal and established rules (despite many criticisms regarding the standard’s privacy policy).