On Tuesday, the plenary session of Brazil’s Senate passed a bill that would regulate crypto trading in the country by introducing “virtual service providers.”
The bill, introduced by Senator Flavio Arns, will now go to Brazil’s House of Representatives, which will vote on it. If the bill is approved, the executive branch will have the power to veto the bill. The executive branch will also have the power to decide which regulators will have the power to oversee crypto service providers.
According to the bill’s rapporteur, Irajá Abreu, the country’s central bank will likely be responsible for regulating the crypto industry.
“We moved forward with discussions on the report so that we can finally vote here today on the regulation of cryptoassets, which some call cryptocurrencies — an extremely important and pressing issue,” Abreu said.
The bill deals with anti-money laundering
The bill contains input from three other bills in Brazil’s Congress and could set the stage for a broader regulatory framework. As the industry has grown at a pace, the need for cryptocurrency regulations has become more apparent. For Brazil, such laws are very important, as it is the largest market in Latin America.
According to Chainalysis, between June 2020 and July 2021, Brazil’s crypto trading volume was around $91 billion.
The law will also require crypto service providers to follow some guidelines for protecting customer data and funds. In addition, anti-money laundering practices will also be part of the standard requirements.
Will regulations increase the chances of cryptocurrency fraud?
Brazil is also one of the largest scam markets in the region. Last year, a crypto scam worth an estimated $503 million (2.5 billion reais) last year. However, the new bill fails to provide the necessary regulatory clarity to help minimize these situations.
The bill will also reportedly define digital asset fraud. Other changes to the criminal code include provisions for imprisonment and fines for digital asset fraud. Currently, sentences of two to six years are lower than those recommended in an earlier version of the bill, which recommended four to eight years.
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