Cryptocurrencys swift expansion and incorporation into global finance have pushed many countries to consider new regulations.Discussions regardingnew mandateshave been widespread among government officials everywhere in the region since the 2017 crypto boom.This comes as concerns over new forms of digital assets continue to grow, especially post the infamous 2022 dip.One country that has recently gone ahead of the curve is Brazil.
This June, Brazil passed a law to regulate cryptocurrency with the help of its central bank.Image source Pexels.This is a big step forward for the country, as Brazil has had a booming cryptocurrency industry in the last few years.Currently, it ranks as the country with the seventh highest cryptotrading volume.
For a closer look at this significant new development, continue reading below.A background on Brazils history with cryptocurrencyBrazils initial cryptocurrency surge happened between 2016 and 2017 when their Bitcoin transactions grew from US$160 million (R$765 million) to US$2.4 billion (R$11 billion) in a single year.Fast-forward to 2021, when the Brazilian real depreciated, but locals continued to trade billions in Bitcoin and stablecoin.In 2022 an estimated US$2 billion (R$9.4 billion) was traded despite crypto fluctuations.Regarding investment portfolios, cryptocurrency is also more common among Brazillian investors, as they place more importance on it than United States stocks.The high demand ushered in a wave of brokerage platforms for cryptocurrency that initially operated without regulation.This eventually led to the prominence of a few reliabletradingplatforms that can accommodate the high volume of cryptocurrency transactions, along with world-class flexibility and transparency.Additional features such as VPS hosting and instant withdrawals have also been a huge plus, as a big portion of Brazillian users are day traders that hinge on quick movements.On top of this, with over 214 million crypto-traders in the country, Brazil has always ranked high when it comes to smartphone usage.The majority of traders use handheld devices and, thus, were more than happy to adopt trading platforms optimized for mobile use.In line with these positive developments that continue to create a promising environment for crypto traders, Brazilslargest brokerannounced that it was going to start allowing cryptocurrency trading in 2022 by offering ten digital assets to traders.This made it very apparent that cryptocurrency was here to stay.
Soon after, a bill to regulate the industry was proposed, and recently, it was signed into law.What the new Cryptoassets Act meansFirst and foremost, the bill provides a legal definition to cover crypto assets.
The law states that these virtual assets digitally represent a value that could be electronically traded or used for investing.
This applies to a wide range of digital currencies and assets.The act also officially grants the Central Bank of Brazil the power to regulate and supervise all trading activity.Notably, it will be able to determine which companies can legally operate in the market.This will be managed through a licensing system that requires all cryptocurrency platforms to register.It will also allow authorization for several foreign crypto payment providers.
This is in response to the forecasted continued growth of the cryptocurrency industry.Additionally, the decree sets new regulations in place to further protect digital currencies against money laundering schemes.Before this, the country only extended its existing Anti-Money Laundering Law to virtual assets under certain contexts.Now, any violator caught can be imprisoned between three to ten years.This decree officially took effect on June 20, 2023.
Since then, several platforms have received theirpayment provider license.As a testament to how this decree is already beneficial, this will allow providers to widen their digital banking services for cryptocurrency.In the hopes of ushering in more innovation, plans to release a debit card feature for converting crypto into a fiat currency are also in motion.All of these signify progress for Brazil as it moves into a new frontier for its financial industry.
This also marks a milestone globally, as more countries are expected to follow suit.It is a step in the right direction for the growth of Latin Americas largest economy.