🇧🇷BCR #38: Senate To Vote on Crypto Legislation This Week
If approved, the bill has a clear path to being signed into law by President Jair Bolsonaro
Boa tarde frens:
The big news this week is that the Federal Senate of Brazil is slated to vote on PL 3825/2019, legislation that would create a comprehensive regulatory framework for cryptocurrencies in the country. This means that the finish line is now within sight for a debate that has been ongoing since 2015.
A Senate plenary vote on the bill, authored by Senator Flávio Arns, was scheduled for last Tuesday, April 12. However, because not enough senators showed up for the vote, was delayed until Tuesday, April 19, per reporting by CoinTelegraph Brasil and Portal do Bitcoin.
If approved by the Senate (as expected), the bill go back to the Chamber of Deputies for a vote to approve the final text. If approved, the bill advances to President Jair Bolsonaro’s desk for signature.
The key provision of the bill assigns the Executive Branch with the power to assign an agency to regulate the crypto industry - both defining market guidelines and anti-money laundering compliance rules. The Banco Central will most likely be given this authority.
Additionally, the bill contains an import tax exemption for bitcoin mining equipment. However, due to the high price of electricity in Brazil, it’s unclear how much this moves the needle for bitcoin miners seeking new jurisdictions in which to operate. The legislation also stiffens penalties on actors who use cryptocurrency for financial crimes such as pyramid schemes.
Senator Iraja, the lead sponsor and rapporteur for the bill in the Senate, stated that he’s in active contact with Aureo Ribeiro, rapporteur for the Chamber of Deputies bill that passed in December, about working on a reconciled text.
“I'm doing everything in contact with the Chamber's rapporteur, who did a very good job. The Central Bank's technical team has also been very helpful. The texts are similar and converged into one.”
Iraja said in an interview with Valor Economico:
“There is a demand from the market for a safer business environment and the need for criminal classification to avoid fraud, in addition to adjusting Brazil to international agreements. The sector moves around R$ 130 billion in the country a year and, in the last two years, Brazilian investors were injured by scammers in more than R$ 6.5 billion.”
🗞Brazil Crypto News Rundown
Banco Itaú announced the distribution of its first-ever investment fund with exposure to crypto assets, in partnership with crypto asset manager Hashdex.
The Hashdex Crypto Selection FIC FIM will be open to all investors, with a minimum investment of just R$1.
The fund will be be actively managed with the goal outperforming the Nasdaq Crypto Index. Performance fees will be 2% annually, plus 20% of the returns that exceed the NCI.
Itaú had previously been known for its staunch opposition to cryptocurrencies.
The fund will initially invest in a basket consisting of various Hashdex ETF products: HASH11 (35%), BITH11 (20%), WEB311 (18%), DEFI11 (16%) and ETHE11 (11%).
Claudio Sanches, director of investment and pension products at Itaú Unibanco.
“This announcement demonstrates that we are attentive to the main market trends and to promote the sophistication of our clients' investment portfolio. We already offered products on our shelf that access the areas of cryptoassets and blockchain, and the possibility of this partnership to make the Hashdex Crypto Selection fund available complements the offer at the moment.” (CoinTelegraph Brasil) (Portal do Bitcoin) (Valor Investe) (Estadao)
Mercado Bitcoin intends to expand into other Latin American countries this year, CEO Reinaldo Rabelo said in remarks at the Founders Tech Summit. Brazil’s largest crypto exchange is looking to expand via acquisition in Mexico, Argentina, Chile, Peru and Colombia.
“We want to enter by acquisition, we do not want to start at zero. In this way we’ll begin by following the regulations of each country. For this reason, acquisition seems the most obvious route.”
When asked about the reported acquisition of 2TM Group, Mercado Bitcoin’s parent company, by Coinbase, Rabelo neither confirmed nor denied the rumor.
“We have nothing to say. Coinbase is a publicly-traded company in the United States.”
Rabelo also stressed that foreign exchanges must abide by local laws and regulations if they want to operate in Brazil. He stated:
“We see large players not paying taxes, not following data protection regulations, not following anti-money laundering rules. Binance and all of the international companies do not assume responsibility to follow local regulation. This is very bad for our own ecosystem, because they end up facilitating the rise of pyramid schemes and scams, which are frequently supported by these companies.” (Bloomberg Linea)
2TM, the parent company of Mercado Bitcoin, announced plans to launch a crypto asset manager focused on quantitative trading via a partnership with Giant Steps, a Brazilian asset manager with 100,000 investors and US$1.5bn in total AUM. (CoinDesk) (InfoMoney)
Crypto asset manager Hashdex accounts for 77% of the crypto ETF market on Brazil’s B3 exchange and has nearly 180,000 investors in its various crypto products. (CoinTelegraph Brasil)
Novadax announced the listing of 40 new tokens, which will be progressively made available for trading this month. (CoinTelegraph Brasil)
American bank BNY Mellon announced that is working to incorporate crypto and potentially stablecoins into the Brazilian banking system. It is also working to incorporate CBDCs, such as the Digital Real, for payments, as well as asset tokenization. BNY already offers a CVM-approved crypto investment fund in Brazil, the Trend Bitcoin Dollar FIC FIM - which has XP as its manager. Akash Shah, the bank’s global chief growth executive, commented:
“Crypto will be part of people’s investments, in the same way they invest in commodities or another asset.” (CoinTelegraph Brasil)
Passfolio made seven new tokens available for trading for its Brazilian users. They include Maple Finance (MPL), DeFi Pulse Index (DPI), Index Cooperative (INDEX), Ribbon (RBN), Liquity (LQTY), Frax Shares (FXS) and FRAX. (CoinTelegraph Brasil)
Mercado Bitcoin listed two new tokens for trading: Serum (SRM) and Harvest Farm (FARM). (Portal do Bitcoin)
Inflation figures in Brazil are surprisingly high, according to Banco Central President Roberto Campos Neto, after the country registered its highest inflation data since 2003 for the month of March. He said:
“We are analyzing this surprise to see if it changes anything regarding the trends…We will now analyze and see which factors are generating this surprising inflation.” (Bloomberg Linea)
The Digital Real pilot project should launch in the second half of 2022, Banco Central President Roberto Campos Neto said this week at an event promoted by Arko and Traders Club. However, he hedged by stating that the project “could be a little late”. Campos Neto also revealed that the CBDC will have an issuance limit, or a fixed supply, similar to cryptocurrencies like bitcoin.
Campos Neto noted that while he still views cryptocurrencies as an investment rather than a currency, he does see a pathway for cryptos to “evolve” into a means of payment. He also emphasized in his talk that he believes the innovation happening in the crypto space is very real and positive overall:
“It is important to understand that this movement is irreversible. We don't really know what will happen in five, six years. The growth is very exponential, for example, I have observed in the last few months different protocols that in fact, when I look ahead, some things change in relation to the convergence that I had imagined. Change for the better, more efficient, more integrated. (Livecoins) (CoinTelegraph Brasil) (Portal do Bitcoin)
Fábio Araújo, the Banco Central economist overseeing the Digital Real project, said that blockchain and Web3 should play a critical role in expanding the Brazilian financial system, though the emergence of Pix means its unlikely that crypto will be adopted as a means of payment. Speaking at the Brazil Conference hosted by Harvard University in the US, he said:
“You have to give options for investment, credit, insurance. And that's what we see that crypto technology can offer to a market that is still not covered today. That's the focus we have for Web3 technology and crypto in Brazil.” (CoinTelegraph Brasil)
Parfin, the Brazilian crypto trading and custody firm, inked a partnership with Metamask to offer services to funds, market makers, trading desks and financial institutions in Latin America. Brazil is a top 5 country for Metamask users, and Parfin becomes the first Latam company join Metamask Institutional. Marcos Viriato, CEO of Parfin, commented:
“Through this new partnership, we will further facilitate the entry of relevant players into the crypto market. Mainly in relation to the protocols of the DeFi segment. It is worth mentioning that we will do all this through a single, reliable and centralized custody solution.” (Portal do Bitcoin) (CoinTelegraph Brasil) (Valor Investe)
Bitfy, the Brazilian crypto wallet startup, was selected to join the third cohort of Mastercard’s Start Path Crypto program. (CoinTelegraph Brasil)
Food delivery app Rappi is integrating bitcoin and crypto payments into its app via a partnership with Bitso and BitPay. The pilot project is being rolled out in Mexico; it’s unclear if it will eventually expand into Brazil. (CoinTelegraph Brasil) (Portal do Bitcoin) (Exame)
Binance Holdings became an official partner of B Fintech according to São Paulo Board of Trade records, further solidifying Binance’s path to establishing a formal operation in Brazil.
B Fintech was founded in 2020 to carry out “intermediation and agency activities for services and businesses in general, except real estate” on behalf of the company.
Binance maintained that it had no official affiliation or connection with B Fintech, even though the entity listed Binance CEO Changpeng Zhao as a partner.
Courts disputed this distinction, and on three occasions held B Fintech was responsible in customer disputes against the exchange.
With the entrance of Binance Holdings, CZ is no longer a partner of the entity
Binance stated in a press release:
“Binance, the largest global provider of infrastructure for the blockchain ecosystem and cryptocurrencies, reported that it operates in permanent dialogue with local regulatory authorities and is fully committed to the development of the sector in Brazil and worldwide, which includes the regulation of the segment. The company also highlighted that the recent announcement of the acquisition process of Sim:paul, a Brazilian brokerage authorized by the Central Bank and the Securities and Exchange Commission (CVM), reinforces this.” (CoinTelegraph Brasil) (Portal do Bitcoin)
Binance also has a new CNPJ (tax ID number) registered with the Receita Federal (Brazil’s tax authority), as of February 4, Portal do Bitcoin reports.
The registration occurred at roughly the same time when the exchange announced it was looking to purchase a local brokerage that would require Banco Central approval
It’s an open question whether the new Binance Holdings CNPJ is for the company as a crypto exchange, and if it would then need to make IN 1888 reports to the Receita Federal
Crypto ATM provider CoinCloud will allow Brazilian customers to purchase ApeCoin, the Bored Ape Yacht Club token, at its terminals. (CoinTelegraph Brasil)
Flow Podcast, a popular Brazilian channel, secured a sponsorship with crypto exchange Bitfinex. (CoinTimes)
hi, a Singapore-based crypto super-app that uses a use-to-earn model, announced that it is launching its applications in Brazil. (CoinTelegraph Brasil)
Meta, the company formerly known as Facebook, opened two Sao Paulo-based job vacancies that require knowledge of metaverse and blockchain. They include Manager of Campaigns and Policy Programs and Public Policy Manager. (Livecoins)
A van of masked men claiming to be associated with a cryptocurrency platform threw upwards of $R100k worth of cash at pedestrians on a street in São Paulo. (Livecoins)
Brazilian merchants that offer payment options in crypto aren’t seeing much usage, according to a Folha de S. Paulo report. Parque Hotel Holambra, a São Paulo hotel, hasn’t had a single customer pay with bitcoin in three years of offering the feature. Guilherme Coelho, the hotel’s executive director, commented:
"I believe that many people who own bitcoin are not sure how to use it, or simply prefer to keep it as an investment. Several customers have already commented on it, but so far no one has made a payment". (CoinTelegraph Brasil)
🎮 NFTs, Gaming and Metaverse
Volkswagen Brasil is releasing a series of NFTs featuring current and historic vehicle models, with packs available for purchase for R$50 and R$75 each. The NFTs, minted on the Polygon network, are for sale through Volkswagen’s own platform called Digital Garage VW, in partnership with Brazilian company OnePercent. The platform will accept crypto, credit card and Pix for payment. Fabio Rabelo, head of digitalization and new business models at Volkswagen Latin America, commented:
“It's a new experience for fans of the brand to interact using the technology of NFTs and all that it provides. Adding the two sets, we are releasing more than 60 digital cards representing renowned models and Volkswagen icons.” (Livecoins) (CoinTelegraph Brasil) (Estadao)
Pedro Scooby, a surfer who starred in Big Brother Brasil 22, is launching his own collection of NFTs that will give holders special benefits like access to parties and events. He will sell 30,000 tokens via the Idol-NFT platform, with each unit possessing a different price and benefit. The most expensive token, of which 20 will be available, entitles the holder to a five day trip “in a paradise on the Brazilian coast”. (CoinTelegraph Brasil)
Lagoinha Baptist Church opened the first Brazilian church in the metaverse, specifically the AltSpace VR platform which can be accessed via PC or Oculus Quest headsets.
🏛 Public Policy, Regulation and Enforcement
A column published in O Globo suggested that Capitual, a fiat-to-crypto gateway service used by Binance and others, operates without authorization from the Banco Central.
According to columnist Lauro Jardim, Capitual registered with the Receita Federal as a “payment institution” but did not obtain the license required by the BC to operate in this area
Capitual responded to Portal do Bitcoin asserting that its transactions are conducted through Acesso Soluções de Pagamentos S/A, which does hold a proper license with the BC. In a statement, it added:
Capitual clarifies that, in relation to its partnership with Binance, it does not convert cryptocurrencies to Real and vice versa. Capitual enables the transfer of funds in Reais to the Binance platform. The user, with their resources already available on the exchange, then carries out their asset exchange operations with other users in the Binance environment.
Cláudio Oliveira, known as the “Bitcoin King”, was sentenced to 8 years in prison for embezzlement and crimes against the financial system. The Paraná judge asserted that his company, Grupo Bitcoin Banco, was all a facade with no bitcoins, no transactions and nothing recorded on the blockchain. Oliveira scammed an estimated 7,000 customers out of R$1.5bn (US$319m). (Portal do Bitcoin) (CoinTimes) (Valor Investe) (CoinTelegraph Brasil)
The CVM, Brazil’s Securities Authority, published a stop order prohibiting the company Toke Invest Securitizadora from offering investment contracts. (Portal do Bitcoin)
Notable Brazilian YouTubers such as Wilson Rafael, Colonia Contra-Ataca and Júlio Cocielo had their channels hacked by actors promoting various cryptocurrency scams. (Livecoins)
A São Paulo court ordered cryptocurrency exchanges to sell all assets of a man who owes R$1.192m (US$253k) worth of debts. (Livecoins)
Federal Deputy Geninho Zuliani introduced a bill that prohibits confiscation of cryptocurrency savings below or equal to 40x the minimum salary. Zuliani commented:
“Unseizability must also be granted in those cases in which digital currency-type cryptoassets with a digital representation of value denominated in their own unit of account, whose expressed price does not exceed 40 minimum wages”. (Portal do Bitcoin)
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