A cryptocurrency law that has been debated for months has been approved by Brazil’s lower house after withdrawing some of the changes proposed by the Senate. The proposal ruled out two planned tax exemptions for green mining operations and the issue of separating customer assets from corporate funds for virtual asset service providers (VASPs).
Virtual Currency Law Finally Approved in Brazil
The cryptocurrency law project, identified under number 4.041/2021, was approved by the House of Commons at its November 29 meeting. delayed Several times With the general elections that took place last month, before the law can be declared it must be ratified by President Jair Bolsonaro, who must sanction it.
Lawmakers voted to rescind most of the Senate’s proposed changes, allowing the law to be approved in a more general form and providing an opportunity for more specific rules to be developed later. . The bill’s rapporteur, his Deputy Expeditto Neto, said the law was important to the country. he said:
We are voting on historical issues. Today, countries are ahead of the curve in regulating activities with digital assets. We have the support of current and future governments on this issue.
According to local media reports, the debate over the law hurried Due to the unknown stance that President-elect Luis Inacio Lula da Silva’s government will take on the issue, some lawmakers may find resistance to the new government, whose bill is due to take effect on January 1. I argue that it cannot.
Separation of Assets and Other Elements Excluded
An issue left out of the final document was a tax break proposed to apply to the cryptocurrency mining industry that uses green energy in its operations. The project rapporteur recognized that tax-related regulations should be defined in a separate bill on this issue.
Another challenge was the issue of customer asset segregation, which would force virtual asset service providers to segregate customer funds from their own. This has been one of the focal points of the debate, and many agents have endorsed it to help users avoid the loss of funds like the one seen in the recent collapse of major cryptocurrency exchange FTX. .
against racism wonanalysts say that not leveraging client funds in operations could limit the portfolios brokers and other firms in the region can offer, limiting them to offering spot-based trading products. For now, the regulation of these products and the types of guarantees these companies should offer their users will have to be defined on a case-by-case basis by regulators.
The approval of the Cryptocurrency Act will be the starting point for regulating VASPs and other companies using cryptocurrencies in the country. Currently, the Central Bank of Brazil or another specific institution.
Many analysts believe this is just the early stages of this regulation, and expect the enactment of legislation and the rise of specific rules to begin over the next few years. This is the opinion of Warde Advogados partner Isac Costa. Declared:
It will probably take up to two years for the law to actually take effect.
This is because the bill was approved with very general instructions and should be further developed in subsequent bills. But according to digital law attorney Marcelo Castro, the bill establishes a foundation that will help “subsidize future regulation under the law.”
What do you think of Brazil’s recently approved cryptocurrency law? Let us know in the comments section below.
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