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Does Brazil’s crypto bill make it the new El Salvador?

By Darius McQuaid

Edited by Charlie Mellor

12:43, 23 December 2022

A boy wearing a Brazilian jersey is seen walking past a wall painted with the Brazilian flag
Brazil’s new crypto regulation bill comes after El Salvador made bitcoin (BTC) legal tender In September 2021 – Photo: Getty Images

The president of Brazil, Jair Messias Bolsonaro, has signed a crypto regulation bill into law, just days before he leaves office.

Bolsonaro signed the bill after it passed through Brazil’s Senate and Chamber of Deputies. It will likely take effect in June 2023.

The law will establish a crime of fraud involving virtual assets, which can result in between four and six years in jail and a fine.

In addition, crypto firms will have to register in the country and then be allowed to establish physical offices. This will include businesses that offer crypto financing services or crypto exchanges.

The new law also creates a “virtual service provider” licence, which crypto companies will have to apply for.

BTC to USD 

BTC/USD

57,816.20 Price
+0.410% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

XRP/USD

0.48 Price
+6.210% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

BCH/USD

369.40 Price
+5.760% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.50

ETH/USD

3,130.46 Price
+0.360% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

The Brazilian Securities and Exchange Commission

Under the law, cryptos that are considered securities will fall under the regulatory umbrella of Brazil’s Securities and Exchange Commission.

However, Bolsonaro did not say which federal agency would be in charge of supervising cryptocurrencies that are not deemed securities.  

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Is Brazil the next El Salvador?

In September 2021, El Salvador made bitcoin (BTC) legal tender in the country. In Brazil, the new bill does not allow for BTC to be used as legal tender in the country, however, it will place certain cryptos under a definition of legal payments.  

Bolsonaro will spend his last day in the office of Brazil’s president on 31 December, after which Luiz Inácio Lula da Silva will take over as president from 1 January 2023.

Markets in this article

BTC/USD
Bitcoin / USD
57816.20 USD
234.85 +0.410%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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