Brazil’s lower house of Congress has finally passed the long-awaited crypto bill, which legalizes cryptocurrency payments and allows banks to begin offering services in the sector.
The Bill, which primarily seeks to regulate the country’s cryptocurrency sector, will now be presented to President Jair Bolsonaro for approval before his term expires on December 31.
If passed, the law will require all cryptocurrency exchanges and other cryptocurrency custodians to obtain licenses.
Notably, the regulation defines digital assets and their service providers and includes provisions to combat fraud and money laundering.
Active cryptocurrency service providers will also be required to open a physical office in the country.
Most importantly, the bill requires crypto service providers to clearly distinguish between company and user funds.
The bill also includes a grace period for companies to comply with the rules, with those who do not comply risking severe fines or even prison sentences.
Today’s move comes just days after FTX, one of the world’s largest cryptocurrency exchanges, went bankrupt, leaving investors exposed.
This is one of the reasons why Brazilian regulators have emphasized the importance of segregating client funds.
While today’s action does not necessarily mean that Bitcoin will become legal tender, as El Salvador did last year, it is a significant step forward for Brazil, given that the crypto regulation debate has lasted seven years.