RIO DE JANEIRO, BRAZIL – Brazilian lawmakers have prepared a new bill that aims to legalize cryptocurrencies as an investment and means of payment and protect private keys from being taken by the courts.
Federal deputy Paulo Martins presented the bill on June 10.
If approved, the bill will not only expand the legal uses of Bitcoin and other cryptocurrencies but will also manage the power the courts will have when confiscating cryptocurrencies from illegal activities.
The proposal, which will integrate Article 835 of the Civil Procedure Law, states that “while crypto assets are not a currency in themselves, it could be “used as a financial asset, means of exchange or payment, or instrument of access to goods and services or investment.”
The proposed law does not make Bitcoin legal tender but legalizes its use as an investment asset.
A broader interpretation of the proposal would make Bitcoin or Ethereum a means of payment throughout the country.
At the same time, it could be used to pay outstanding debts to the administration in case of “forced bidding or constriction”.
The proposal also discusses the new powers and limitations that Brazilian courts would have once cryptocurrencies are recognized as legal financial assets, such as freezing accounts or confiscating keys.
In this sense, the proposed law protects the privacy of the keys, so a court would not have the power to confiscate them, as it explicitly prohibits judicial access to them.
On the other hand, the proposed law does not explain how authorities can access the self-custody wallets and leaves the responsibility for payments in the hands of users, who would have to transfer payments to court wallets.
When cryptocurrencies are hosted on exchanges, Brazilian courts will have the power to force intermediaries to freeze the debtor’s assets.
“If the debtor’s assets are not located, the creditor may request the competent Court to issue an official notice, electronically, to intermediaries involved in crypto-asset transactions so that the assets corresponding to the amount executed are blocked.”
The proposal is in its initial discussion phase in the Chamber of Deputies, meaning it could still be years before it is approved and passed to the Senate, where it will have to be endorsed and sent to the President for his signature.
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