Brazil: Central Bank Adopts IMF Cryptocurrency Guidelines
Brazil’s Central Bank, Banco Central de Brasil, published an official notice on August 26, 2019, stating that it had adopted the International Monetary Funds’ (IMF) guidelines with regard to cryptocurrency assets.
In a major development in the Latin American cryptospace, Brazil’s lender of the last resort – Banco Central de Brasil – stated that it would be treating bought and sold cryptocurrencies as non-financial products. This means that all traded digital assets will, as such, be accounted as goods on the central bank’s balance sheet.
In a paper titled “Treatment of Crypto Assets in Macroeconomic Statistics,” the Balance of Payments Statistics Committee – an advisory body on external sector methodology to the IMF Statistics Department – recommends that digital assets like bitcoin “should be classified as produced nonfinancial assets as a distinct sub-category under valuables.”
The paper reads in part:
“These assets come into existence as outputs of a production process (i.e., through mining and/or project development) under the control, responsibility, and management of a specific institutional unit using inputs of labor, capital, goods, and services.”
The classification of crypto assets as a good is a major milestone for an asset class that is still trying to find its footing in the mainstream financial ecosystem. Sources state that the recognition of digital assets as property would essentially help them develop into a legit payment mechanism over time.
A Welcome Move for Crypto Adoption
Akin to any other balance sheet of a business entity or a financial institution, a Central Bank’s balance sheet comprises of three major classifications of items – assets, liabilities, and equity.
Per sources close to the matter, Brazil’s Central Bank will include all figures related to selling and buying of digital assets in their Balance of Payments account. The reason behind such classification is that trading of digital assets typically involves the execution of foreign exchange contracts.
Interestingly, given the fact that Brazil is a net importer of cryptocurrency assets, the newly implemented IMF crypto guidelines would result in the lowering in the trade surplus on Banco Central de Brasil’s balance sheet.
In related news, BTCManager reported on August 2, 2019, how Secretaria da Receita Federal do Brasil – the Department of Federal Revenue of Brazil – had made it compulsory for crypto HODLers to disclose all domestic cryptocurrency transactions.