The Brazilian Economic Affairs Commission (CAE) approved yesterday (Feb 22) a proposal that creates a regulation for cryptocurrencies. The rules aim at greater transparency in crypto operations and the prevention of financial crimes.

The approved text replaces Bill 3,825/2019, along with 3,949/2019 and 4,2017/2020, according to the official news agency of the Brazilian Senate.

Irajá Abreu, the Senator of the Social Democratic Party (PSD) who drafted the project, said that this regulation has been created to give transparency to the existing operations and to prevent money laundering and tax evasion.

If the Senate doesn’t request a debate on the topic, the modification could be directly sent to the Chamber of Deputies, although there are still no estimated dates for when it could be put to a vote.

Irajá also said that due to the fact that companies that trade crypto assets are not monitored by the Central Bank or the Securities Commission (CMV), the authorities have trouble identifying suspicious transactions.

He also assured that it would be difficult for the CMV to control these currencies since they’re something that “have no value”, although he believes that the monitoring body should intervene in the event that public offers involving funds from the financial market are made.

The text includes a provision that would eliminate taxes for legal entities with debts until 2029. The companies would then have the chance to invest in machines specialised in mining, preservation and processing of virtual assets, in order to reduce pollution and electricity usage.

“Companies that use 100% of renewable energy sources in their activities and neutralise 100% of greenhouse gas emissions from these activities are entitled to a zero rate,” says the project.

It is estimated that almost 3 million people are registered in cryptocurrency exchange facilities, and the number is also close to the number of investors in the stock market.

“There is a market that is lawful, legal – which is the vast majority of this market – but there are exceptions,” said Irajá, who highlighted the Central Bank and its role in inspecting companies and ensuring that crypto assets are a good investment option and that the cryptocurrencies are an alternative payment method, such as Pix.

The Senate agency reported that in 2018, 6.8 billion reals were traded in virtual currencies and 23 new brokers were created. In 2019, the number had grown to 35, without any supervision from agencies that control the financial system.

“The regulation of the cryptocurrency market must promote free and fair competition, enforce the control and separation of customer resources, define risk management practices, guarantee the protection of personal data, protect and defend customers, and ensure the solidity and efficiency of operations,” details the agency about some of the Irajá guidelines.

These responsibilities must be set by the Executive branch, which must also define which assets will be regulated.

“According to PL 3,825/2019, the body is free to decide whether companies should operate exclusively in the virtual asset market or not. The inclusion of transactions in the foreign exchange market and the need to submit them to the regulation of Brazilian capital abroad and foreign capital in the country must also be defined by the regulator.”

Additionally, the regulator will have to define the conditions and deadlines for current brokers to register and for them to adapt within six months after the proposal comes into law.

Brazilian lawmakers have also debated the gambling regulation that would finally open a legal market in the country. In the Chamber of Deputies, the vote on the bill that legalises gambling was postponed until today, after failing to obtain a consensus on yesterday’s debate.

Arthur Lira, president of the Chamber and in favour of the bill, said that the legalisation includes modalities that “have already existed for many years” and that the most important part of the project is that it introduces the possibility of installing casino resorts.