Brazil is one step away from having its own legislation to regulate bitcoin (BTC) and other cryptocurrencies, since the full Senate yesterday approved the bill that regulates the cryptocurrency sector. After completing this step, the regulation will have to be approved by the majority of the 513 parliamentarians that make up the Chamber of Deputies, where it will be submitted to a new vote before being sanctioned by the President of the Republic.
If there is no presidential veto, nor are new amendments proposed, the proposed law could enter into force 180 days after its publication.
The text presented in the Senate by deputy Irajá Abreu is authored by also deputy Aureo Ribeiro and condenses ideas from other proposals, including that of Flávio Arns, points out a release posted on the official website of the Senate.
In its initial approach, Arns envisioned the Central Bank of Brazil as the regulatory body for cryptocurrency exchanges and other service providers in the industry. However, the bill was amended in the Senate Economic Affairs Commission (CAE) so that now it establishes that it will be the Executive Power that will elect the regulatory body of the sector.
The bill also determines that, to operate in Brazilian territory, cryptocurrency exchanges must be registered in the Financial Activities Control Systemas well as in the National Registry of Legal Entities (CNPJ), of the country’s Special Secretariat of federal income.
This requirement introduced by Senator Soraya Thronicke was justified by noting that registration was necessary or else “Brazilian authorities would face difficulties inspecting cryptocurrency service providers.”
Thronicke added that his amendment was introduced with the idea of avoiding the illegality of cryptocurrency exchangespreventing them from providing information to the Federal Revenue “and ignoring the duty to report suspicious operations to our Financial Intelligence Unit, exposing Brazil to the risk of money laundering.”
For this reason, it is clear that the text is in line with the recommendations of the Financial Action Task Force (FATF), an intergovernmental organization that combat money laundering in the cryptocurrency ecosystem requiring the implementation of the so-called “travel rule”.
As CriptoNoticias has reported, the FATF Travel Rule has been questioned by actors in the Bitcoin ecosystem since it was announced in 2019, considering that the rule has a detrimental effect on user privacy. This is because it establishes that virtual asset service providers (VASPs), such as cryptocurrency exchanges must collect and share the personal data of their customers if they carry out transactions that exceed USD 1,000.
Bitcoin fraud would now be in the Brazilian Penal Code
The document approved by the Senate includes cryptocurrency fraud in the Penal Code and imposes a sentence of 2 to 6 years in prison for those who commit crimes with cryptocurrencies.
During the discussion Flávio Arns, asked the rapporteur Irajá Abreu to consider the possibility of inserting more severe penalties for crimes of financial pyramids and “white collar crimes” that are committed with cryptocurrencies. By this he meant fraud carried out by people with a high socioeconomic status or by government officials.
“The sentence of four to eight years is very low. The escalation of the penalty must be calculated based on the damage caused. The penalty should be from six to twelve years. This would give greater flexibility to judges who should sentence those who harm society by the millions and who cause great harm.”
Flávio Arns, senator from Brazil during the discussion of the Bitcoin Law in the Senate.
In any case, the president of the Senate, Rodrigo Pacheco, classified as “very serious” creating a sentence of 4 to 8 years because it is far from what is established by article 171 of the Penal Code, such as the sentence of 2 to 6 years.
On the other hand, the approved text grants tax benefit until December 31, 2029, to Bitcoin miners that use electricity from renewable sources and neutralize greenhouse gas emissions.