After several years of debate – the bill of law is from 2015 – the proposal to regulate crypto assets (or “virtual assets” as the bill calls them) left the Chamber of Deputies (Brazil’s lower chamber) to be reviewed by the Senate. There is another bill under discussion in the Senate and the outcome will probably contain aspects of both proposals.
Most likely, we will see some regulation of cryptoassets in Brazil this year. The volume of transactions is reaching the tens of billions, showing a growing adoption in the Country. Inflation and devaluation of the Real may well continue throughout 2022, so demand for crypto should continue too. Letting alone all other new and interesting innovations, like NFTs, which are more and more available to Brazilian customers.
Furthermore, fraud schemes using crypto coins continue hitting the news, thus putting pressure on both government and congress. The comments from US Senators in recent hearings discussing Crypto show how similar their opinion are to the ones of Brazilian representatives. In the middle of remarks like “gambling” and “pyramid frauds”, the fact is that constituents/consumers demand a higher protection regarding digital assets. The Brazilian congress will not miss this opportunity in an electoral year.
Thankfully, the topic does not raise much controversy. The existing bills are considered fairly adequate by most specialists. The Senate’s proposal is more interventionist, but in any case, it will remain for the Central Bank to establish the actual regulation. The bills focus on the concepts and legal definitions, essential for a functional regulated market. They also determine harsher penalties for crimes involving crypto assets.
As usual, well-established incumbents (yes, there are some already) are eager for some regulation, not only to increase the attractivity of crypto assets as investment, but also to inhibit competition they deemed unfair. As a matter of fact, regulation is advancing in many countries and financial services of that nature tends to have similar regulation throughout the globe. Brazil will not differ.
The trick, as always, is to find the right balance between regulating an evolving market (and its players) without affecting innovation. For that reason, any regulation has to continue fostering new services and better solutions in a fair, competitive environment.