Senate works on bill to regulate cryptocurrencies

When China and other big countries launch cryptocurrencies, it will kick  off a global revolution

Senator Irajá Abreu (Social Democratic Party, PSD, of Tocantins), rapporteur of the bill that regulates cryptocurrencies in Brazil, plans to present his draft in October at the upper house’s Economic Affairs Committee (CAE). “We are working to hear all institutions by October and present the report before November,” he told Valor. “Cryptocurrencies are on an upward curve all over the world and here, in Brazil, we cannot turn a blind eye to this issue. On the other hand, there must be a minimum of regulation.”

Last week, the senator met with Central Bank President Roberto Campos Neto and head of relations, citizenship and conduct supervision, Maurício Moura. According to Mr. Abreu, the idea is that the blueprint “comprises the private sector, but also the need for the Central Bank to be able to inspect and regulate this activity.”

The senator adopts a cautious tone to talk about the issue, stating that the meeting with the Central Bank served to get to know the opinion of the federal government. From now on, Mr. Abreu intends to meet with financial market players, experts in cryptocurrencies and others to broaden the debate. The bill (3,825/2019) was proposed by Senator Flávio Arns (Podemos of Paraná).

A possible sticking point with the monetary authority has to do with the anonymity of transactions. Mr. Moura, with the Central Bank, stated earlier this month that anonymity “will not be an option.” In other words: those involved in the transactions will be known “from end to end.” But the senator says that “there is nothing decided on this issue.” “It’s still too early to put forward any position on the report I’m going to present,” he says.

In turn, the Central Bank’s attention began to turn more often to cryptocurrencies in mid-2020. Last month, Mr. Campos Neto said Brazilians held around $40 billion in cryptocurrencies, noting that demand is undergoing a “very large increase”.

But, at official events, Mr. Campos Neto and other Central Bank directors have stressed that there are differences between cryptocurrencies and Central Bank Digital Currencies (CBDC). Unlike an official currency, the former does not function as a medium of exchange, store of value and unit of account. CBDCs are a kind of new representation of currencies issued by central banks.

The Central Bank has been studying the creation of the digital real for a little over a year. Some of the guidelines have already been presented, such as issuance only by the monetary authority itself and financial firms’ custody. The Central Bank has also held debates with experts, broadcast on its YouTube channel.

In recent weeks, Mr. Campos Neto reported advances in solving problems that the monetary authority had been encountering in the construction of the digital real, such as risks of excessive leverage. He believes the currency may already “have some pilots” in 2022.

The Central Bank and the Securities and Exchange Commission of Brazil (CVM) declined to comment.

Source: Valor international