Brazil's proposed law does not seek to make crypto legal tender, but it will legalize payments and investments.
Brazilian legislators have prepared a new bill that aims to legalize cryptocurrencies as an investment and means of payment, as well as protect private keys from being taken by courts.
The bill was presented by federal deputy Paulo Martins on June 10.
If approved, the bill will not only will expand the legal uses of Bitcoin and other cryptocurrencies, but will also manage the power that the courts will have when it comes to confiscating cryptocurrencies from illegal activities.
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The proposal, which will be added to the article 835 of the Civil Procedure Law, establishes that “although cryptoassets are not a currency in themselves, they could be “used as a financial asset, a means of exchange or payment, or an instrument of access to goods and services or investment.”
The proposed law does not make Bitcoin legal tender, but it does legalize its use as an investment asset.
In fact, a broader interpretation of the proposal would make Bitcoin or Ethereum a means of payment throughout the country. At the same time, it could be used to pay outstanding debts to the administration in the event of “forced supply or constriction.”
Cryptocurrencies from the point of view of the law
The proposal also discusses the new powers and the limitations that the courts would have of Brazil once cryptocurrencies are recognized as legal financial assets, such as freezing accounts or confiscating keys.
In this sense, the proposed law protects the privacy of the keys, so a court would not have the power to confiscate them, since it explicitly prohibits judicial access to them.
On the other hand, the proposed law does not explain how authorities can access self-custody wallets and leaves the responsibility for payments in the hands of users, who should transfer payments to court wallets.
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In the event that cryptocurrencies are hosted on exchanges, the Brazilian courts will have the power to force intermediaries to freeze the debtor's assets.
“In the event that the debtor's assets are not located, the creditor may request the competent Court to issue an official letter, electronically, to the intermediaries involved in cryptoactive operations, so that the assets corresponding to the amount are blocked. executed.”
The proposal is in initial discussion phase in the Chamber of Deputies, which means that it could still be years away from being approved and passed to the Senate, where it will have to be endorsed and sent to the president for his signature.
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