11 Oct 2021 Arjun Agarwal
Brazil May Follow El Salvador And Make Bitcoin A Legal Tender
Brazil may join El Salvador into making Bitcoin (BTC) legal tender and allow its use as payment for goods, a new bill in the country’s Congress reveals. If the authorities approve the bill, it will allow Brazilians and tourists to pay for goods and services via the world’s leading cryptocurrency to date.
Currently, El Salvador is the only country, which allows a digital currency to be used for payments with its Bitcoin Law, taking effect in September. However, the Bitcoin implementation didn’t go as smoothly as expected, since the official El Salvador BTC wallet crashed and lost the funds of some users. Furthermore, over 90% of businesses have not accepted BTC for payment yet, according to a recent survey.
The 2303/15 Bill, introduced by federal deputy Auro Ribeiro in the House of Representatives received a “thumbs up” and is now headed to the Plenary of Chambers for further discussions.
Ribeiro noted that if the bill gets approved, digital currencies in Brazil could be legally used as a payment option for “big-ticket items such as houses and cars, to food in restaurants like McDonald’s”.
However, the bill is a much broader regulatory framework, rather than just declaring Bitcoin as a legal tender, as with El Salvador’s Bitcoin Law. The bill expands the field of digital currency regulations, which also includes crypto exchanges. Тhe law propositions seek to also “force virtual asset service providers to follow rules of communication of financial transactions, with identification of customers and recordkeeping,” according to a statement on the Brazilian Congressional website.
Furthermore, Brazil is also working on increasing the penalties for digital currency offenders, which, at least in theory, should be aimed directly at money launderers. Brazil might raise the sentence for money laundering offenders to a maximum of 16 years and eight months, up from 10 years, while doubling the monetary penalty to two-thirds of the laundered money.
Meanwhile, the CEO of cryptocurrency exchange BitMEX made a bold prediction that by the end of next year, at least five countries will have accepted Bitcoin as legal tender.
Alex Hoeptner, CEO of the BitMEX crypto exchange, noted that developing countries will lead the way in Bitcoin adoption.
“My prediction is that by the end of next year, we’ll have at least five countries that accept bitcoin as legal tender. All of them will be developing countries.” Hoeptner announced.
According to the CEO of BitMEX, there are three key factors in Bitcoin adoption in developing countries. The first reason is remittance, as remittances are making 23% of El Salvador’s GDP in 2020. Hoeptner emphasized that 75% of the total global remittances are aimed at low and middle-income countries.
“This money has got to find a way home somehow, but the current system of remittances – led by money service providers like Western Union – is ripping people off by charging them an average of 10% just to send money home the next business day.” the CEO of BitMEX added.
The second factor is inflation since developed countries show a healthy 2.4% inflation rate while developing countries have a 5.4% inflation rate forecast by the International Monetary Fund (Fund).
The third and final reason, according to Hoeptner, is politics, since many politicians “are skilled and savvy, and have an interest in positioning themselves as progressive, populist, and new age thinkers.”
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