Yesterday, the Brazilian President signed into law a framework for regulated crypto. Law 14,478/22 determines the guidelines for regulating the provision of virtual asset services. Digital assets deemed to be securities will be regulated by the Brazilian Securities and Exchange Commission. Another entity will regulate nonsecurity digital assets. Within six months, the Central Bank is expected to establish the conditions and deadlines for the adaptation to the new rules by virtual asset service providers.
Alex Adelman, CEO & Co-founder of Lolli, a bitcoin rewards app, emailed a comment on the news from Brazil.
“Brazil’s move to regulate bitcoin as a payment mechanism sets the stage for greater bitcoin adoption in the country and Latin America at large. Crypto adoption has continued to surge in Latin America, up by 40% in 2022, as Inflation in Latin America grew at its fastest pace in over 15 years at an average of roughly 19%. High inflation in countries like Argentina and Venezuela have led many to turn to cryptocurrencies like bitcoin. Unlike the Brazilian real, Argentinian peso, or Venezuela Bolivar which have continuously faced high inflation and depreciation, bitcoin has increased in value over time despite periods of volatility.”
Adelman said that inflation is a key factor driving crypto adoption – even while inflation in Brazil is relatively moderate at just 6% (less than in the US).
“Countries with significantly higher inflation than Brazil have an equal if not greater potential to benefit from bitcoin as an anti-inflationary, decentralized store of value,” said Adelman. “As one of the largest economies in the world and a trade leader in Latin America, Brazil’s use of bitcoin as both a store of value and a medium of exchange also suggests that neighboring economies will soon adopt similar laws to facilitate cross-border commerce. Countries with large unbanked populations in Latin America and all over the world stand to benefit from using bitcoin to eliminate dependence on banks by giving anyone with internet connection access to financial resources. In 2023, we will continue to see more countries with high inflation in Latin America and beyond adopt Bitcoin for payments and as a currency.”
