Posts

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

https://valorinternational.globo.com/

Brazil lawmakers revisit pension bill as economic outlook dims

Brazil’s pension overhaul proposal returns to the congressional spotlight this week, with a committee of lower house lawmakers opening its analysis of the government’s bill just as the outlook for the economy is deteriorating rapidly.

The special committee convenes after weeks of political delay and a sprinkling of public holidays. From an economic and market perspective, the timing could not be more critical.

The central bank’s weekly survey of nearly 100 financial institutions on Monday showed the median gross domestic product forecast for 2019 fell sharply to 1.49 percent from 1.71 percent the week before.

That was the bleakest outlook so far this year for the Brazilian economy. The forecast in January was for 2.55 percent growth. A string of weak data suggested the economy may have shrunk in the first quarter and is still struggling.

On Monday, the latest purchasing managers index survey of Brazil’s services sector showed activity contracted in April for the first time since September.

The weakening outlook for 2019 suggests this year is something of a write-off economically, despite hopes that investors would be encouraged if social security reform makes progress in Congress.

But hopes on that front have faded also. The government recently increased the targeted savings from the overhaul to 1.237 trillion reais ($312 billion) over the next decade, but market expectations of what will eventually be delivered are around half that.

The Special Committee of some 40 lawmakers is expected to begin debate and analysis of the pension reform bill on Tuesday and hold 11 public hearings this month before submitting a report, possibly in early June.

Further discussions on the report’s recommendations would then follow, and if all goes smoothly, the committee could vote by the end of June, setting the stage for a vote by the lower house plenary in early July.

Most analysts are skeptical of that timeline, citing President Jair Bolsonaro’s struggles to build a coalition behind the bill.

“We see risks of delays pushing the (special committee) vote into July, depending on the level of political cooperation between the government and centrist parties,” Barclays analysts wrote in a note last week.

Investors have grown more pessimistic in recent weeks. The average estimate of expected savings over the next decade in a Morgan Stanley client poll is now 620 billion reais, compared with 690 billion reais only two months ago. Only 5 percent of respondents expect approval by the end of June.

The deteriorating outlook has also weighed on Brazilian markets. The real has hovered around 4.00 per dollar since late March, weaker than many analysts predicted earlier in the year.

 

Source: Reuters

Brazil pension reform chief sticks to savings target and May vote

Brazil’s government is sticking to its goal of having its pension reform bill, with promised public savings of more than 1 trillion reais ($262.5 billion) over the next decade, ready for a vote in the lower house of Congress by the end of May.

In an interview with Reuters in Brasilia on Tuesday, Rogerio Marinho, secretary of social security and labor at the Economy Ministry, pushed back against market concerns that the timeline and savings target are too optimistic.

Investors say tackling Brazil’s crippling social security deficit is critical to putting the country on a firmer economic and financial footing. The Economy Ministry has warned that failure to pass any reform will plunge the economy into recession as early as next year.

“The proposal we are putting forward to Congress is one that we think is adequate for the country,” Marinho said when asked if savings of 1 trillion reais was an achievable target.

Asked if anything less was therefore “inadequate,” Marinho said the Brazilian parliament would discuss the bill and “make modifications, even improvements.”

The government’s reform package aims to raise the minimum retirement age for men and women, increase the length of time workers must pay into the system, and reduce benefits for rural workers and military personnel. The bill projects total savings over the next decade of just under 1.2 trillion reais ($315 billion).

Economy Minister Paulo Guedes said last weekend that 1 trillion reais was an “important line” in the sand. But recent surveys from Morgan Stanley and Brazilian brokerage XP Investimentos show investors expect that will be watered down to around 700 billion reais.

Marinho recognized that the complexity of the proposals and challenges in overhauling a decades-old system. The draft bill was only presented on Feb. 20, but he is confident it will be ready for a vote by the full lower house in May.

“In terms of timing, we are able to meet our deadlines. Everything will depend on the dynamics of the debating process in parliament,” he said. “We know pension reform is not an easy process. But we’re very happy to have that debate.”

Once passed by the lower house, the bill will go to the Senate for final approval.

While Marinho and other officials say support for pension reform among lawmakers has never been higher, a lack of political cohesion in Congress could delay approval. Some analysts say it could drag out until the final months of 2019.

In that regard, Marinho applauded President Jair Bolsonaro’s recent tweets, statements and video selling pension reform to the public, following criticism from some allies that he had been too silent on the issue.

Asked if pension reform depended on Bolsonaro’s support, Marinho said: “I think so, but it also depends on a narrative based on facts.”

“He has credibility. Without doubt he is the leader of this process, and anything he does will be beneficial, including galvanizing and mobilizing people to get onside with this change that’s so necessary for the country,” he said.

Analysts at BNP Paribas on Monday noted that of Bolsonaro’s more than 500 tweets since becoming president, only five were about pension reform. That is fewer than the eight jokes he has tweeted out to his 3.68 million followers.

 

Source: Reuters

Brazil Is Latest Jurisdiction to Enact Data Privacy Regulations

Similar to the European General Data Protection Regulation in scope and breadth, Brazil’s newly passed data protection regulation covers the processing of personal data and establishes a fundamental right of privacy for data subjects, among other protections.

On August 14, 2018, Brazilian President Michel Temer signed Brazil’s first comprehensive data protection regulation into law, the result of a years-long effort by Brazil to match the more inclusive data protection rights found in European laws, most recently with the passage of the European General Data Protection Regulation (GDPR). The new Brazilian law (Law 13,709/2018, known as the Lei Geral de Proteção de Dados or LGPD), amends the Brazilian Civil Rights Framework for the Internet (Law No. 12,965) which was passed in 2014 and governed the use of the internet in Brazil. The LGPD is expected to go into effect in February 2020.

The LGPD is organized into 65 articles and is similar to the GDPR in its expansive scope. It covers the processing of personal data (with special protections carved out for sensitive personal data and children’s personal data) and establishes a fundamental right of privacy for data subjects, including the right to obtain information about data processing from data controllers. It is also similar to the GDPR in its extraterritorial breadth, protecting personal data even when it is collected outside of Brazil, so long as it is processed for the purpose of providing goods within Brazil.

The LGPD includes security measures and notification requirements in the event of a data breach, requiring controllers to notify the national authority and any affected data subject in the event of a security incident that could cause damage to data subjects. Also similar to the GDPR, the Brazilian law includes guidelines for the processing of personal data by public authorities and personal data processing agents, and prohibitions against the international transfer of data in certain circumstances.

Sanctions for infractions by data processing agents include a fine of up to 2% of “conglomerate revenues in Brazil for the prior financial year” and/or a daily fine. (These fines cannot exceed a total maximum of 50 million reais ($12,315,880.00) per infraction). Nonmonetary sanctions include publicizing the infraction and possibly blocking or deleting the personal data at issue until compliance is achieved.

When signing the regulation into law, President Temer vetoed the sections that created an independent data protection authority to enforce the LGPD, arguing that the legislature did not have the power to create such an entity. Thus, as of now, it is unclear how the bill will be enforced. News sources report that President Temer has indicated he will quickly send a bill to Congress that creates a new data protection authority.

The Brazilian law is the latest in a string of similar data protection lawspassed in the wake of the GDPR’s long-awaited enactment in May.

 

Source: JD Supra

Brazil’s Congress approves new amnesty for undeclared assets abroad

Brazil’s Senate passed a bill on the 14th of March that reopens an amnesty for Brazilians to repatriate undeclared assets from abroad without prosecution, though they will have to pay 35 percent in tax and fines.

The 120-day repatriation window will open as soon as President Michel Temer signs the bill into law.

Temer’s government expects to collect 13.2 billion reais ($4.32 billion) in extra revenues from the new program that was decided on the success of an earlier amnesty last year that brought in 46.8 billion reais.

Those revenues helped Brazil’s authorities meet their primary budget deficit goal for 2016. The proceeds from the new amnesty will be shared with cash-strapped Brazilian states and municipal governments that are desperate for funds to pay salaries and suppliers.

The amnesty taps the desire of Brazilians who hold billions of dollars in off-shore assets to come clean with the tax man at a time of growing international uncertainty and the increasing exchange of tax information between governments.

The extra cash comes in handy in a country that has posted widening budget deficits for three straight years and whose government is struggling to restore fiscal discipline with unpopular austerity measures.

Critics say the amnesty allows holders of assets gained through graft to launder funds they stashed abroad at a time when prosecutors are investigating Brazil’s largest ever corruption scandal involving bribes and political kickbacks.

Source: Reuters Brazil