Understand what changes with the project that regulates the cryptocurrency sector in Brazil

The Chamber of Deputies approved, on Tuesday (29), the basic text of the project that regulates the trading of cryptocurrencies in Brazil. The proposal, which establishes the guidelines for regulating the provision of virtual asset services, will now go to the presidential sanction.

For experts, the approval of the proposal helps bring more transparency to the cryptocurrency sector, as it makes money laundering, concealment of assets and currency evasion more difficult.

“The bill basically better regulates exchanges. These companies now have to have an office in Brazil, as well as a series of responsibilities and need to account for these investments”, summarizes Arthur Igreja, specialist in Technology and Innovation.

The approved text followed the opinion of the rapporteur, Deputy Expedito Netto (PSD-RO), who accepted most of the changes made by the Senate in Bill 4401/21 (former PL 2303/15).

Main points

The project establishes principles such as good governance practices and a risk-based approach as market guidelines; information security and protection of personal data; and protection and defense of consumers and users. Understand:

virtual assets

The project considers a virtual asset to be a digital representation of value that can be traded or transferred electronically and used to make payments or for investment purposes.

According to the approved project, legal entities that perform services such as:

• Exchange, on behalf of third parties, of virtual currencies for national or foreign currency;
• Exchange between one or more virtual assets;
• Transfers from them;
• Custody or administration, even if of control instruments;
• Participation in financial services and provision of services related to the offering by an issuer or sale of virtual assets.

Another point is in relation to public administration bodies and entities, which will now be allowed to maintain accounts in these companies and carry out operations with virtual assets and derivatives in accordance with the regulations of the Executive branch.

“Now there is a change in the characterization of cryptoassets, firstly, bitcoin and other cryptoassets as financial assets. Before, bitcoin was seen as a commodity here in Brazil. And all cryptos must now be classified as currencies. It is an important point for Brazil in terms of the evolution of the national market”, says Luiz Pedro Andrade, crypto asset analyst at Nord Research.

The text also determines that, where applicable, the rules of the Consumer Defense Code will be applied to operations in the virtual asset market.

regulatory body

Even with the approval of the project, there is still no definition of which will be the regulatory body for the sector in Brazil, since the nomination rests with the Executive. However, there is almost a consensus among experts that the Central Bank (BC) plays this role.

According to the text, the chosen entity must establish conditions and deadlines, not less than six months, for adaptation to the rules of the project by the service providers of virtual assets that are in activity.

Among the duties of the regulatory body are:

• Authorize the operation, transfer of control and other shareholding movements of the virtual asset service provider;
• Establish conditions for holding positions in statutory and contractual bodies in a virtual asset service provider;
• Supervise providers;
• Cancel, ex officio or upon request, authorizations;
• Establish the hypotheses in which the activities will be included in the exchange market or must be subject to the regulation of Brazilian capital abroad and foreign capital in the country.

Luiz Pedro Andrade assesses that the project increases security for investors, especially those new to the market. With a regulatory body and guidelines, cases like that of FTX, which declared bankruptcy, can be avoided and, if they occur, investors will not suffer large losses.

“To operate as a cryptocurrency brokerage in Brazil, you will need to have a CNPJ and Conar approval. This brings greater security for investors, especially for beginners,” he said.

“It is an excellent start for crypto regulation in Brazil. It tends to bring more security both for the investor and for those who are undertaking. In addition, bringing this security and credibility makes room for creating new investment methods and attracting institutional investors and those from the traditional market to the crypto market in Brazil,” he said.

Renato Opice Blum, lawyer and professor of digital law, says that it is important for the chosen body to be aware of mechanisms that protect investors from brokerage collapses.

“It is important that there be some type of insurance or credit guarantee fund and minimum capital stock conditions, among other rules to bring security and reimbursement capacity”.

Blum also remembers the separation of assets, a practice where the investor’s assets are differentiated from the consultancy’s assets, preventing bankruptcy from affecting the clients of that particular company.

For Andrade, regulation organizes the Brazilian market, as foreign brokerages that operate in the country end up occupying space and the market of national agents.

“It will be possible to check if the brokerage is regulated, this is important. And also foreign brokers that ‘usurped’, in a way, the Brazilian market by taking space from other national brokers. Now they will have to regulate themselves or leave the country”.

penalties

On mechanisms to punish and prevent crimes in the context of crypto assets, the project adds a new criminal type of fraud to the Penal Code, assigning seclusion from 4 to 8 years and a fine for anyone who organizes, manages, offers or distributes portfolios or intermediates operations involving virtual assets, securities or any financial assets with the aim of obtaining an illicit advantage to the detriment of others.

“The bill has been running in the market for seven years. And cryptoassets were always involved in money laundering, asset concealment, currency evasion. It’s a gray area, very complicated. And now we see a maturation of the financial market”, said Arthur Igreja.

*With information from Agência Câmara.