Brazilian Senate passes cryptocurrency Bill

The proposal aims to protect consumers and tackle issues such as money laundering and other illegal practices.

The Brazilian Senate has passed a bill that regulates the cryptocurrency market in the country. The goal is to define rules to regulate the trading of the assets and ensure consumer protection guidelines as well as tackle illegal activity in that space.

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The proposal sets out a framework that includes the regulation of crypto exchanges, which would fall under the scrutiny of the Brazilian Central Bank and the securities and exchange commission CVM.

In addition, the Brazilian cryptocurrency bill also outlines rules around consumer protection, as well as measures to tackle money laundering as well as other illegal practices, such as fraudulent management of crypto exchanges, financing of terrorism and mass destruction weapons.

The current Bill will not encompass non-fungible tokens (NFTs), but senators expect this will be addressed through a separate proposal after the approval of the cryptocurrency regulations. The project will now be voted by the Lower House of the Congress and then signed into law by the president.

Brazil and Indonesia lead the world in terms of crypto adoption, according to research published earlier this month by crypto exchange Gemini, with 41% of respondents in both countries stating they own crypto. The percentage stood at 20% in the US and 18% in the UK by comparison.

Digital currency plans

Another project in the digital currency space currently underway in Brazil is the launch of the digital version of the Brazilian real. Earlier this month, the president of the country's Central Bank, Roberto Campos Neto, said the Real Digital project is on track to launch awards at the end of 2022.

Brazil's plans to launch its Central Bank Digital Currency (CBDC) are based on guidelines set out last year, which took into account the positive impact, as well as the risks involved in having a digital real, such as data protection and cyber security, as well as regulatory issues.

The guidelines place emphasis on the possibility of developing new market offerings based on innovations such as smart contracts, internet of things (IoT), and programmable money. The digital real may also be used in retail payments and will enable users to carry out online operations and possibly make payments offline.

As an extension of the physical currency, the distribution of the digital real will be intermediated by custodians of the National Financial System and the Brazilian Payments System, with no remuneration to these institutions.

The launch of the digital real is part of the central bank's agenda for the modernization of the Brazilian payments industry, which included the launch of instant payments last November and the implementation of Open Finance.

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