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Brazilian Blockchain and Cryptocurrency Legislation

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There are nowadays zero laws or regulations in place in Brazil that address Cryptocurrencies. Yet, current legislative as well as administrative frameworks do offer some direction with regard to Cryptocurrency transactions. To date, Brazilian law does not recognize virtual currencies as legal tender. The Brazilian real is the official currency of Brazil as established by Decree-Law 857–69 and Law 10192/01. Under the overall Civil Code system, Cryptos are treated as properties. Refer to Act 10406/02. The Capital Markets Law as well as the Brazilian Securities Exchange Commission may apply to Initial Coin Offerings (ICOs), at least those that exhibit the essential functioning features of a security. CVM Rule 400/03 and other CVM advice may thus apply to offers. There is presently any provision in Brazilian policy for a virtual currency-specific anti-money laundering mechanism. Nonetheless, the current Anti-Money Laundering Statute may be applied to many forms of virtual currency.

Public authorities in Brazil, particularly at the federal level, are becoming more optimistic about Cryptocurrencies and Blockchain technology, leading to the development of a small number of rules in this area during the last several years. Now, a number of government organizations are taking the initiative to build blockchain-based projects and systems, with the ultimate goal of improving the effectiveness of government operations. Many legislation to govern Cryptocurrencies as well as platforms are now being discussed in Brazil’s federal legislative branch, with the goal of fostering the growth of this sector.

What is Cryptocurrency?

Cryptocurrency, or electronic cash, is a virtual payment method built on top of Cryptographic hashing techniques. Cryptos are able to serve as a medium of exchange and a kind of digital accountancy because of the encryption technologies they use. You should have a Crypto wallet in order to store and spend Cryptocurrency. Wallets are digital payment storage systems, and they may be web-based services or locally installed programs. These wallets are the medium in which the identity-verifying and Cryptocurrency-linking encryption keys are kept. As Cryptos have only been around for a short period of time, the market for them is quite unstable. Cryptos are uninsured and difficult to transform to fiat monies like the US dollar or the Euro since they do not even require banks or any other third party to control them. Cryptos are also susceptible to hacking like any other intangible technological asset since they are built on computer code. Last but not least, because Cryptos are stored in a digital wallet, losing your wallet or access to it or to wallet backups means losing your whole Crypto asset.

What is Blockchain?

Simply explained, a blockchain is an open-source database or ledger which is kept in sync over a computer system. A blockchain may be thought of as an electronic database since it saves data digitally. Most people know about blockchains because of its integral function in Cryptocurrency systems like Bitcoin’s to keep a secure and decentralized record of transactions. Blockchain technology is novel because it eliminates the requirement for a trusted third party while also ensuring the integrity and security of a recorded transaction. The data structure of a blockchain is fundamentally different from that of a conventional database. Data on a blockchain is organized into blocks, which are collections of records.

Law Taxation in Brazil

Brazilian legislation does not presently include Cryptocurrency-specific tax rules. Nonetheless, the Brazilian tax authorities publish several Questions and Answers that make it clear that Cryptocurrencies must be reported on tax returns and that any profits made from selling them are taxable as capital gains. The Brazilian authorities is worried about the potential dangers of Cryptocurrency. For instance, the Brazilian Central Bank or Banco Central do Brasil, warned its people about the dangers associated with the holding as well as dealing of Cryptocurrencies in its Notification №31,379, published somewhere at end of 2017.

The Federal Reserve Bank of Brazil has issued a warning in light of the increasing interest of economic agents or society and institutions in so-called virtual currencies, saying that these have no guarantee of conversion to sovereign currencies and are not backed in any real assets, making their use entirely at the risk of their holders. The Brazilian Central Bank has no jurisdiction over exchanges or custodians of virtual currencies on behalf of individuals, businesses, or government agencies in Brazil. The National Financial System’s legislative and regulatory framework does not include provisions addressing Cryptocurrencies. In Brazil, for example, the Federal Reserve Bank does not monitor or control the use of Cryptocurrencies. Contrary to the concept of digital money found in Law 12,865 of October 9, 2013, as well as its control by regulatory measures published by the Federal Reserve Bank of Brazil in accordance with the recommendations of the National Monetary Council, so-called virtual currency is not a form of legal tender in Brazil.

Cryptocurrency Legal Issue Insights

As Cryptocurrency-related regulations have not been passed by the majority of governments, the status of Cryptocurrency-mining in the majority of nations is ambiguous at best. The FinCEN classifies Cryptocurrency miners as payment processors, making them potentially liable to regulations governing the transfer of funds. Cryptocurrency mining, for example, is seen as an economic activity in Israel and is thus liable to corporation income tax. Regulatory clarity is still lacking in India and other countries, however Crypto mining is welcomed in Canada and the United States. Although some governments have outright prohibited Crypto-related activity, the vast majority do not restrict Cryptocurrency extraction.

Disclaimer: The author’s thoughts and comments are solely for educational reasons and informative purposes only. They do not represent financial, investment, or other advice.

Read more: https://coinscapture.medium.com/brazilian-blockchain-and-cryptocurrency-legislation-2eb41295f762

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