Brazil Targets Illegal Bitcoin, Stablecoin Use Through New Proposals
Brazil is intensifying efforts to regulate and counter criminal use of cryptocurrencies. The central bank has proposed a rule requiring authorization for crypto exchanges, treating stablecoin transactions as foreign exchange operations. Additionally, President Lula da Silva introduced a bill allowing authorities to seize and convert digital assets into fiat currency during investigations. Concerns over the use of stablecoins for money laundering and tax evasion have been raised by the central bank's president. Brazil, the largest digital asset market in Latin America, is exploring strategic opportunities with cryptocurrencies, including potential Bitcoin reserves.
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Brazil's Plan to Combat Illegal Crypto Use
Digital asset hotspot Brazil is aiming to crack down on criminal use of cryptocurrency through separate legislative and regulatory proposals issued by the government and central bank this month. A rule proposed by the country's central bank on Monday would make it easier to target illegal stablecoin use by introducing authorization requirements for currency exchanges, including crypto trading platforms.
Central Bank's Proposal on Stablecoins
The proposed rule states that any purchase, sale, or exchange of virtual assets pegged to fiat currency would be deemed a foreign exchange operation. According to the central bank's website, 'BCB Resolution 521 establishes rules for some activities of virtual asset service providers (VAPs), which are now treated as foreign exchange and international capital market operations.' This aims to bring regulatory clarity to the stablecoin ecosystem.
Presidential Bill to Seize Virtual Assets
President Luiz Inácio Lula da Silva has sent a bill to Congress that would allow authorities to seize property, including virtual assets, during criminal investigations. The proposal includes converting seized assets into fiat currency, stating: 'In the case of seizure of foreign currency, bonds, securities, checks issued as payment orders, or any other instruments representing value or virtual assets, the judge will order their conversion into national currency.' However, the bill is still pending approval by Congress.
Concerns Over Stablecoin Tracking
Brazil's central bank President Gabriel Galipolo has expressed concerns about the challenges of tracking stablecoin usage. In February, he noted that crypto transactions 'maintain some kind of opaque vision for taxation or for money laundering.' Stablecoins, which are digital tokens normally pegged to non-volatile assets like US dollars, are often used for fast and efficient transactions.
Brazil's Economy and Crypto Leadership
As Latin America's largest economy, Brazil is the region's biggest digital asset market and boasts the largest number of crypto ETFs. These include funds tracking major cryptocurrencies such as Bitcoin, Ethereum, and Solana. A high-ranking official in the government earlier this year proposed the idea of a national strategic Bitcoin reserve, stating it could be 'determinant for our prosperity.'