Cryptocurrency law brings more security to the sector in Brazil, analysts say

Report published on the magazine's website EXAME dealt with the approval, by the Chamber of Deputies, of the bill that creates the new Legal Framework for Cryptocurrencies. The report discussed the issue with experts, such as Dr. Matheus Puppe, partner in the TMT, Privacy & Data Protection area at Maneira Advogados.

Cryptocurrency law brings more security to the sector in Brazil, analysts say

Experts point out that the country can take advantage of other large economies that have not yet approved laws on the subject

(Photo: Andressa Anholete/Getty Images)

João Pedro Malar

Published on 11/30/2022

The approval of the bill that regulates the cryptocurrency sector in Brazil should bring greater legal certainty to companies operating in the country, both Brazilian and foreign, even with the absence of some elements that could be important for the segment.

The assessment was made by experts at EXAME, who generally see the future implementation of specific rules for the sector as positive, especially those that establish more mechanisms to protect consumers in relation to scams and other types of losses.

William Ou, CEO of token.com in Brazil, assesses that the approval is “an important step for the cryptocurrency sector, but it is important to highlight that it will still be subject to presidential sanctions and therefore may still suffer vetoes”.

For investors, he believes that the text will bring more protection by including services linked to cryptoassets in the Consumer Protection Law and also creating a new classification for fraud crimes, with the so-called “fraud in the provision of virtual asset services”. He believes that the device should curb financial pyramids.

“From the companies’ perspective, operating in an environment with well-defined rules brings greater security and predictability. The Central Bank, which will carry out the regulation, has a competent body and we are optimistic that we will have a regulation that will balance investor protection and market development”, points out the CEO.

The Brazilian Cryptoeconomic Association (ABCripto), which brings together cryptocurrency brokers operating in Brazil, celebrated the approval of the text, which according to it “guarantees that Brazilian society takes another step towards the security and development of the sector”.

“The Regulatory Framework is extremely important, as it establishes clear rules regarding the responsibilities of companies and the regulator. ABCripto believes in a very promising future for the area and understands that it is the first step of many that will be taken in relation to the cryptoeconomy in Brazil”, says the organization.

Despite advanced approval compared to other countries, Matheus Puppe, partner at Maneira Advogados, assesses that the project is “a little late”, but at a “good time” and is “a small step towards framing an extremely complex legal aspect”. “The market has already welcomed crypto assets that are fully traded on various platforms”, he considers.

He criticizes, however, that one of the main flaws of the project was in the conceptualization of a cryptoactive, based on the idea of a “digital representation of value that can be traded or transferred by electronic means and used to make payments or for investment purposes”.

“Such a concept is essentially erroneous, since virtual assets are distinct from cryptoassets (tokens, cryptocurrencies, NFTs and others), which are in fact solutions with a unique identity ensured by cutting-edge cryptography (in this case, the blockchain), and virtual assets can be any digitalization or virtual document, opening the door to the most varied interpretations”, highlights the lawyer.

Isac Costa, partner at Warde Advogados and professor at Ibmec and Insper, also assesses that “perhaps the law will take up to two years to have any practical effect, which leads me to believe that its approval is a merely symbolic act. However, bad with it, even worse without it.”

Regulation of cryptocurrencies by other countries

The text was approved before the implementation of regulatory projects in other major world economies, including India, the United States and the European Union. The last two are already discussing proposals on the topic, and Bernardo Schucman, CTO of We3Lock, states that the Brazilian model “is in line with that adopted by the main powers in the world”.

At an international level, the project should place Brazil “at the forefront of countries that have already addressed the matter at the legislative level, providing more legal security to cryptoactive service providers who want to operate in the country”, according to Gabriel Stanton, tax lawyer at Souto Correa Advogados.

“Often, foreign companies that want to operate in Brazil, such as exchanges or issuers of crypto assets, question whether there is specific legislation and what the regulatory risk is related to the topic, and such questions have been increasing recently, especially as a result of the latest events in this market”, explains the lawyer, referring to the bankruptcy of FTX.

He believes that the law “provides general guidelines to be followed by cryptoactive service providers and comes in a way that complements sparse and individualized understandings from the Federal Revenue Service, the Securities and Exchange Commission and the Central Bank, reducing the regulatory risk of this market.”

“The PL should provide greater solidity to the cryptocurrency market, as participants who intend to operate in it must submit to state supervision and have a minimum level of governance and internal controls, placing those participants without solid governance on the sidelines of this market,” highlights Stanton.

https://exame.com/future-of-money/lei-de-criptomoedas-traz-mais-seguranca-para-setor-no-brasil-dizem-analistas/