In December 2022, in Brazil, The Federal Government sanctioned a law that regulates the cryptocurrency market, defining digital assets, providers and the crime of fraud with these resources, as well as their sanctions.
The Law was published in the Official Gazette (DOU) on the 22nd of the same month, with a period of 180 days to enter into force from that date.
What does the Brazilian cryptocurrency regulation say?
The new guidelines state that cryptocurrency exchanges They can only operate in Brazil with prior authorization from the body or entity of the federal public administration.. This, in turn, must establish conditions and terms of at least six months for companies to adjust their services.
The law also includes, in the Penal Code, a new type of embezzlement, whose penalty is imprisonment from four to eight years and a fine. According to the Senate Agency, the use of virtual assets to organize, manage, offer and distribute portfolios or carry out the intermediation of operations that involve cryptocurrencies to obtain an illicit advantage at the expense of others, inducing or keeping the individual in error.
In the Money Laundering Law, the norm also includes crimes committed repeatedly. The penalty now has the aggravating factor of one to two thirds of the prison sentence of three to ten years.
The new regulation also says that brokers must keep all transaction records. The objective is to transfer the information to the organs of control and fight against money laundering and organized crime.
About crypto assets
The law views a crypto asset as a digital representation of valuewhich can be traded or transferred electronically and used to make payments or with the intent to invest.
So, are excluded from this definition:
Traditional fashions (national and foreign)
Real resources maintained in an electronic environment
Loyalty program points and rewards
Real estate securities and financial assets under current regulations
The Senate tried to include permission for public administration bodies and entities to have accounts in companies specialized in crypto assets and derivative operations, as regulated by the Executive Branch.
How does regulation affect the cryptocurrency market?
known as Legal Framework for Cryptoactivesthe law, according to industry experts, is one more step in the construction of a regulatory ecosystem for a market that is growing every day.
Julien Dutra, director of Government Relations of the Mercado Bitcoin brokerage, says that there are already consolidated laws followed by operators committed to the evolution of cryptocurrencies in Brazil, such as the Consumer Code, Normative Instruction 1,888/19 of the Federal Revenue and the Civil Code and Commercial Chamber. But With the latest guidelines, the cryptocurrency industry is going strong.
“The Legal Framework, in addition to providing for the definition of a regulator, defines fundamental rules for operators, such as authorization and license to operate in the Brazilian market, in addition to the obligation to report suspicious financial transactions to COAF. [Consejo para la Control de Actividades Financieras]“, Explain.
This Legal Framework is a direct attack on financial fraud that use cryptocurrencies as a backdrop, since it updates article 171 of the Penal Code. For Dutra, “the law brings more security to the market, to its operators and, above all, to investors and consumers, because it brings protective bases to the Brazilian crypto-ecosystem”.
The regulation seems to be very positive for investors. The protection provided by the law not only provides more comfort to the most experienced cryptocurrency investors, but can also serve as a kind of lure for those who do not yet have the courage to enter this universe precisely because of its unprecedented nature and the lack of stricter rules.
The benefits also extend to brokerage firms. “[La ley] creates rules for everyone, putting them on the same level of obligations, creating a balanced space for competition, which is always positive for any marketDutra adds.
It further notes that the regulations promote guiding principles, such as free competition, initiative, data and consumer protection, privacy, fraud prevention and money laundering. “By having these rules established, the operators will have, from this law, all the necessary dogmas and values that directly encourage investment, entrepreneurship and innovation for this market.”, he highlights.
With the new law, what is expected of the crypto market in 2023?
Although the market is at a time known as the Bear Market – the “Bear Market” is an expression that defines the periods in which the stock market faces devaluation and investor pessimism – given that crypto assets have been facing general lows, projections for 2023 are encouraging.
The more traditional cryptocurrencies, such as Bitcoin and Ethereum, continue to show positive enough results. enough for investors to continue with their applications. Another point is that the low of the cycle can be a good opportunity to acquire these assets and prepare for when the numbers go up again.
Regarding the law, there are numerous possibilities of applicability in crypto assets, which means that many solutions must be created, step by step, along with regulation, further solidifying the cryptocurrency conjunctures in Brazil.
Julien Dutra affirms that the Central Bank is preparing the law, which has even created a specific group to study tokenization. “In addition, the CVM [Comissão de Valores Mobiliários] is already investigating the regulatory development that promotes the development of tokenization applied to securities”.
Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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