Brazil: 5 key points of the bill approved on crypto assets

The Brazilian Chamber of Deputies approved on Nov. 29 the bill that regulates transactions with crypto assets in Brazil.

The project, which has been the subject of intense discussions and battles between financial institutions, is now pending approval by President Jair Bolsonaro, since it had already been approved by the Senate.

The text creates rules for all companies that trade virtual assets and intends to offer legal security to players in the sector, which should translate into greater attractiveness for investors.

It is a market that was estimated at the end of 2021 – before, therefore, the recent drop in prices – at US$50 billion, according to the director of Monetary Policy at the Central Bank, Bruno Serra, at an event.

Here are 5 key points in the expert assessment:

1. SEGREGATION OF ASSETS

Deputies chose to remove the section of the project that determined the mandatory segregation of assets, that is, that institutions such as brokerages (exchanges) could not use investor resources for their own operations.

The measure would legally prevent practices such as those observed in the collapse of the FTX exchange, which left thousands of investors with losses in the sum of billions of dollars, although, in this case, the information revealed so far points to illegal conduct.

On the other hand, it could be an obstacle to innovation in the sector and would lead to market concentration, given that only exchanges with greater economic power would be able to operate at scale.

2. CENTRAL BANK AS REGULATOR

The project defines that it will be up to the Executive Branch to supervise the crypto market in Brazil.

According to deputies and experts, the tendency is for the responsibility to fall on the Central Bank and the Securities and Exchange Commission (CVM), depending on the category of asset in question.

3. HEADQUARTERS IN BRAZIL

Financial institutions such as exchanges will have to establish headquarters or representation in Brazil, with CNPJ (National Register of Legal Entities), so that they can operate, with the alleged objective of strengthening the legal security of customers and other investors.

This was a claim by Brazilian exchanges to, in theory, provide more equal competition conditions and reinforce security for investor complaints.

4. CRIME TYPIFIED IN THE PENAL CODE

The approved text points to a new type of embezzlement, specific to the distribution and intermediation of digital or related assets with the aim of obtaining gains over the loss of third parties, through illicit or fraudulent devices, which should facilitate the conviction in such cases.

5. OPEN QUESTIONS

The legal framework for crypto assets, according to experts, establishes general guidelines for the functioning of the market. This means that more specific points will still depend on further regulation by responsible bodies. There will still be periods for institutions to adapt.

With information from Bloomberg Línea

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