2023-03-04 14:47:00
The cryptocurrency market in Brazil gained regulation to call its own. In other words, now it has to meet some basic rules to work. The new law (14.478/2022), also known as the Legal Framework for Cryptocurrencies, was approved in December 2022, but only comes into force in July 2023.
During this period, companies that trade cryptocurrencies need to adapt to regulation. And those who buy and sell also need attention.
In practice, the regulation of cryptocurrencies establishes guidelines for institutions that sell crypto assets and also penalties for those who commit fraud and other crimes with these assets. Understand below what the law determines and what changes in the lives of those who buy and sell digital currencies.
What is cryptocurrency regulation?
These are rules that need to be followed by anyone who wants to actively participate in the cryptocurrency market in Brazil – that is, brokers, companies, financial institutions and also the people who buy and sell these assets.
What does cryptocurrency regulation say?
The Legal Framework for Cryptoassets is simple, and left aside many points debated by the market – such as the protection of people’s assets in the event of broker bankruptcy, for example. However, the new law increases the security of those who buy and sell crypto assets because it establishes penalties for those who commit scams.
Check out what the cryptocurrency regulations say.
Brokers will need authorization
Just like any financial institution, cryptocurrency brokers (known as exchanges) will need a specific license to operate in the country. The law also says that companies that offer the service of buying and selling cryptocurrencies need authorization to do so.
The guidelines and process for obtaining these authorizations have yet to be established and publicized. Until then, those already in Brazil can continue operating normally and those who have services related to digital assets can also continue with this offer.
Market will have a supervisor
The cryptocurrency market will have a regulator, as is the case with many sectors in Brazil. The law has not defined who this supervisor will be, but the Central Bank and the CVM (Securities Commission) are the most highly rated, mainly because of the duties that the law defined for this body. See some of them:
- Authorize operation, transfer of control, merger, spin-off and incorporation of the virtual asset service provider;
- Supervise the virtual asset service provider and apply penalties in case of non-compliance with the law;
- Cancel authorizations when necessary.
For those who operate crypto assets, knowing who regulates this market is essential when seeking information and guidance. Furthermore, it is also easier to direct demands, such as reporting suspected fraud, for example.
Penalties for those who commit fraud
The regulation establishes that crimes related to digital assets will have penalties provided for in the Penal Code.
According to the law, “organizing, managing, offering or distributing portfolios or intermediating operations involving virtual assets, securities or any financial assets with the aim of obtaining an illicit advantage, to the detriment of others, inducing or keeping someone in error, through artifice, ruse or any other fraudulent means” is now a crime, punishable by four to eight years in prison and a fine.
In other words, any bad faith attitude that leads someone to losses will be considered a crime. This punishment can be even greater if the fraud occurs frequently or through a criminal organization.
In practice, the new law creates a safer environment for those who buy and sell cryptoactives.
Does the law apply to all cryptoactives?
The regulation applies to all virtual assets, and the law defines a virtual asset as “the digital representation of value that can be traded or transferred by electronic means and used to make payments or for investment purposes”.
In practice, the Cryptocurrency Legal Framework is applicable to all digital currencies – such as bitcoin and ether (or ethereum), for example. However, he does not mention other cryptoactives, such as NFTs, and says that it will be a body or entity of the federal public administration that must establish which financial assets will be regulated.
In other words, this body (which will probably be the Central Bank) must also make it clear which cryptoactives need to follow this regulation.
The following are excluded from this law:
- National currency and foreign currencies;
- Electronic currency: money that is moved through electronic systems, such as money in your bank account, for example;
- Instruments that give access to products or services, and benefits, such as points and rewards from loyalty programs: many tokens fall into this category;
- Assets that are already regulated by the CVM (Securities Commission)
What changes in the lives of those who buy and sell cryptoactives?
While the Central Bank or the CVM do not establish exactly which cryptoassets are included in this regulation and how this supervision will be carried out, nothing changes for people who operate cryptocurrencies.
When does the cryptocurrency law come into force?
In 180 days from the date of publication of the law, which was in December 2022. In other words, it should come into force from July 2023. But this date could still change, because it depends on the rules that must be published by the Central Bank . In practice, there is no certain prediction of when this will happen.
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