30 Nov 2022 Marsha Tusk
Brazil Adds Bitcoin As A Means Of Payment
November was among the toughest months for the crypto economy, but several events may bring cryptos back to life. For example, the Brazilian parliament approved a complete regulatory framework for the trading and use of cryptocurrencies in the country.
The new legislative framework now adds Bitcoin and other cryptos as a legal form of payment, as they are “a digital representation of value”. The new rules, however, still await Brazilian President Jair Bolsonaro’s official signature in order to turn the framework into a working law.
Cryptos now legal in Brazil
The framework approval is key for transforming Brazil’s inflation-plagued economy, allowing the Central Bank of Brazil (BCB) to be in charge of the overseeing process when Bitcoin is used as payment, while Brazil’s Securities and Exchange Commission (CVM) will act as a watchdog when it is used as an investment asset.
The news comes at a time when Brazilians are frequently using more cryptos for trading and store of value than those on the stock market. The legislative framework would lay the foundation for Brazilians to utilize cryptos for more legal day-to-day usage in financial transactions.
The downsides of the legislation
However, the new bill had its share of rejection among political parties, as lawmakers proposed to cut some state and federal taxes on purchases of Bitcoin mining machines. Despite the clause only considering the tax cut would apply only to those miners, who use renewable energy, the text was overruled and eventually fell from the legislative framework.
The bill would also include the regulation of service providers such as exchanges, who will need to adhere to specific rules to operate in Brazil. For instance, entities must register in order to establish operations as Bitcoin service providers in Brazil. The new bill is defining such entities as those who provide cryptocurrency trading, transfer, custody, administration, or sale on behalf of a third party, but they would start their operations in Brazil after explicit authorization by the federal government.
Another set of rules aims to split company funds from users' funds for added protection, as the recent FTX saga saw user funds being mixed with the company’s funds, but was also rejected on Tuesday’s vote.
The crypto market recovers
The news may be one of the reasons why Bitcoin’s price trajectory is now going up, after a massive slump on November 28. The crypto leader managed to secure a price point of over $16,000 after being on the verge of breaking the $16,000 support on Monday. However, trading volumes are relatively flat, which means Bitcoin may fail to hold above $16,500 and head back towards sub-$16,000 levels.
On the other hand, Ethereum seems to be in a perfect spot for a recovery, as the altcoin leader has gained almost 10% over the past 7 days, regaining its position from November 12.
Ripple is also adding nearly 8% weekly, while most of the other crypto projects in the top 100 are increasing anywhere between two and twelve percent.
Huobi token (HT), Fantom (FTM), and Dogecoin (DOGE) are the only massive gainers from the past week with all of them gaining over 30%. On the other hand, the biggest crypto loser in the top 100 is BinaryX (BNX), which induced a double-digit loss, while several other cryptos are trading on a 2-10% loss, including NEXO, LEO, and Chiliz (CHZ).
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