President Jair Bolsonaro signed a bill that legalizes using Bitcoin (BTC) and other cryptocurrencies to settle payments.
Earlier approved by the Brazilian Parliament, the bill seeks to establish a legal framework for cryptocurrencies. Although the bill does not recognize cryptocurrencies as legal tender, it accepts crypto tokens as investment assets.
Under the new rules, third-party crypto exchanges will need “virtual service provider” licenses to operate in Brazil.
The bill mandates exchanges to separate client and company assets to avoid a situation like the FTX crisis. It also imposes a penalty of up to six years in prison for fraud involving cryptocurrencies.
The coins that fall under the category of securities will be regulated by the Brazilian Securities and Exchange Commission. The tokens that are not classified as securities will be supervised by another body appointed by the executive branch. The government is expected to choose the Central Bank of Brazil to oversee payments made via crypto.
Following the President’s signature, the new law will provide existing crypto platforms with 180 days to adapt to its rules.
