A proposed addition to an existing law in Brazil would give Brazilians the right to use cryptocurrency as a means of payment, while protecting their private keys from being taken by the courts..
Federal deputy Paulo Martins presented the proposal to the country’s legislature on Friday. If approved, the bill would expand both the legal uses of cryptocurrencies in Brazil and the power courts would have to confiscate it.
BRAZIL: Bill introduced for #bitcoin and crypto to be recognized as means of payment!
—Bitcoin Archive (@BTC_Archive) June 14, 2022
BRAZIL: Bill for bitcoin and cryptocurrencies to be recognized as means of payment!
The proposed addition in article 835 of the Code of Civil Procedure establishes that, Although crypto assets are not a currency in themselves, they could be “used as a financial asset, a means of exchange or payment, or an instrument of access to goods and services or investment”.
This would not necessarily make bitcoin or any cryptocurrency legal tender in the country.. Instead, it would make cryptocurrencies a legally recognized financial asset for investments and other uses.
A broad interpretation of the proposal suggests that cryptocurrencies like bitcoin (BTC) or Ether (ETH) could be used to pay for goods and services across the country. It could also be used to pay off outstanding debts “in case of forced offer or constriction” of the crypto assets”.
The proposal also talks about the new powers and limitations that the Brazilian courts would have once crypto is recognized as a financial assetsuch as freezing exchange accounts.
Nevertheless, The proposal has also fallen short of giving courts the power to seize users’ private keys.:
“The following rules will be observed: Access by the Judiciary to the users’ private password is prohibited.”
A debtor would have to send their crypto payment to the court wallet to ensure its validity. The proposal does not mention how the court would obtain cryptocurrencies from self-custodial wallets..
In the case of those who keep their cryptocurrencies in exchanges, the court would have the power to force “intermediaries”, such as exchanges, to freeze the debtor’s crypto assets:
“In the event that the debtor’s assets are not located, the creditor may request the competent Court to issue an official letter, by electronic means, to the intermediaries related to operations with cryptoactives, so that the assets corresponding to the amount executed are blocked. “.
The proposed additions are still in the initial phase of discussion in the Chamber of Deputies within the legislature of the country. This means that it could be several years before the additions are approved by the Senate and signed into law by the president. By then, they may have changed drastically.
Only El Salvador and the Central African Republic recognize bitcoin as legal tender. Tonga is considering following in his footsteps.
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