Brazilian SEC Seeks to Modify its Stance on Cryptocurrency Regulation

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The Brazilian Securities and Exchange Commission is reportedly working to modify the country's regulatory framework in order to regulate cryptocurrency.
According to local media, one major concern is that the measure does not appear to consider tokens to be digital assets or securities, and hence they would not be subject to SEC regulation. The SEC's updated attitude comes after the establishment of a new board and the rising importance of the crypto sector in the country's financial services.

Brazilian lawmakers have been working on cryptocurrency regulations since 2015, but the Senate just passed the final version of a bill in April 2022. After the Brazilian Congress makes the necessary changes, the measure will be presented to the country's president, who will sign it into law.

As described in the authorized wording, a virtual asset is a digital representation of value that may be traded or transferred electronically and utilized for payment or investment reasons.

Furthermore, it establishes mechanisms to combat money laundering and provides best practices for Know Your Customer (KYC) processes. As per the bill, Nonfungible tokens (NFTs) are also not considered securities although most other tokens are still being debated.

A representative from Brazil's SEC told a local newspaper that "the mentioned bill requires specific improvements, such as the definition of virtual assets, prior authorization requirements, and the approval of business combinations in redundant roles with the Brazilian Federal Trade Commission."

Legislators believe that sending the bill to the president to establish what responsibilities the Brazilian Central Bank and the SEC should play in authorizing initial coin offerings and regulating the market is a feasible outcome. Some legislators believe that this proposal creates legal confusion and that a whole new bill should be introduced.

In June, another cryptocurrency-related bill was introduced in the Brazilian Congress. If passed, the proposal would provide the freedom to utilize cryptocurrencies as a payment method while shielding private keys against seizure by the courts. A draught of the bill is now being considered by the lawmakers' committee