by Nuno Menezes
With several financial institutions alerting the dangers of an unregulated currency such as bitcoin, many governments are now trying to regulate it or to outlaw it, which is the case in Brazil.
Brazil is currently one of the countries where the Bitcoin industry and use are skyrocketing. However, recently a draft that might outlaw the use of bitcoin in the country has appeared. On December 14, Deputy Expedito Netto delivered a special report containing the Draft Law 2303/2015 to the committee that will discuss the use of bitcoin in the country. From a crude and retrograde perspective, the report proposes to criminalize the commercialization, intermediation and even acceptance of virtual currencies as a means of payment for the settlement of obligations in the country, thus inserting a specific type in the Penal Code.
Throughout 2017, there was a lot of discussion in the country with the most diverse opinions on a proposal to regulate the market for cryptocurrencies in Brazil. However, the report presented December 14 makes misleading comments about an alleged “invasion” of crypto-coins into the national monetary system. The report still makes clear his retrograde thinking when it states that there is no way to accept that other entities, other than the Monetary Authority of the Country, should have the possibility of issuing currency.
Accordingly, the report recommends that article 292 of the Criminal Code (which provides for the issuance of bearer title without legal permission) to be amended so that the article criminalizes the conduct of those who, without legal permission, issue, intermediation, exchange, storage for third parties, exchange for legal tender in the country or foreign currency, digital currency, virtual currency or cryptocurrency that is not issued by the Central Bank of Brazil. That is to say, by the lack of thought of the report, which presupposes that the commercialization of crypto-coins in the Brazilian market “can cause serious problems in the defense of the popular economy and consumer protection“, the crypto-active ecosystem of this being criminalized, who operates in this disruptive market must be considered a criminal.
Government analysis of the Bill
The report presented by Mr. Expedito Netto has not yet been voted by the special committee. If approved in the special commission, the project will still have to go through the Commission of Constitution and Justice of the Chamber of Deputies (the body that verifies if the Bill is appropriate and legal within constitutional principles).
If the Bill is approved in the Constitution and Justice of the Chamber of Deputies, it can go to the assembly (if 52 deputies so request) or go directly to the Federal Senate (if 52 deputies do not request the House Plenary vote). In the Federal Senate, the process is the same; a report will be appointed to analyze the Bill, and a new commission will be formed. After reviewing this committee, and approving the opinion of the new committee, then be analyzed by the Senate.
The Bill may be modified, for example, if another Member presents a report to replace the opinion submitted by Mr. Expedito Netto; or if the Senate modifies the Bill.
So, until the legislation is approved, there is still a long way to go. However, the Bill as presented in the commission represents a huge setback in the ecosystem of crypto-assets in Brazil and, above all, it is likely to eliminate any possibility of the inventiveness of this new economy.