This week lawmakers in Brazil pushed to advance a bill that would legalize and regulate cryptocurrency— the National Congress of Brazil’s House bill 4401/21.
Senator Iraja Abreu, who sponsored a Senate version of the bill (Senate Bill 3825/19), dropped his version in favor of the House bill, deferring some provisions to 4401-21.
Bom Trabalho! (That’s Portuguese for “Good work!”)
Employing some deft parliamentary maneuvering, Abreu advanced the bill through Brazil’s legislative process. That’s because the Chamber of Deputies (Brazil’s lower house) has already approved 4401/21, so now it only needs to make it through the Federal Senate to get the full legislature’s sign-off to become law. (It’s already been approved by the Brazilian Senate’s economic affairs committee).
If passed, the bill would put in place a comprehensive legal and regulatory framework that would affect cryptocurrency businesses, merchants who accept cryptocurrency, investors, and crypto wallet holders who use digital currencies. to make payments for goods and services.
That will ostensibly hasten crypto adoption in South America’s largest country, where legislators are merely catching up to a fast-paced, growing crypto industry in Brazil. Rio de Janeiro began accepting bitcoin for tax payments earlier this year, the first Brazilian city to do so.
Many Central American countries are also rushing to welcome crypto into their economies and legal frameworks. While El Salvador is most notable among them for President Nayib Bukele’s all-out push to adopt Bitcoin as the country’s legal tender, lawmakers and industry titans in Mexico, Cuba and Honduras are also rushing to join the race.
The Trade-Offs
Increasing legal adoption and regulation of cryptocurrency portends greater mass adoption sooner than would happen with crypto existing outside of the law and only in cyberspace where code is the law. That will inevitably bring with it a tsunami of capital inflows, and new active monthly users who buy and use crypto as money for payments and financing as well.
But alongside the faster integration of cryptocurrency, legal regulation of the industry will inevitably lead to some of the problems that blockchain was invented to solve.
Among these is greater control over the money system by the government and the ability of governments to use finance as a tool of control, exclusion, and even oppression, as they have with fiat money issued by central banks throughout the history of regulated traditional banking.
Conclusion for Crypto Investors and Entrepreneurs
As institutionalized and regulated crypto companies will exist on a much broader and deeper layer of this ecosystem, there will, therefore, be new opportunities for investing opposites, disruptors and risk takers looking for a ridiculous return on investment like what bitcoin returned to its first investors. They will find many of these opportunities in DeFi blockchains and second layer infrastructure.
