2022 has been extremely dynamic for the crypto industry. Despite the so-called crypto winter, we’ve seen a significant evolution in the use cases for cryptocurrencies. For instance, from January to September this year, cross-border transactions using Bitso reached up to 2.1 billion dollars, while business accounts, companies and institutions that use Bitso as a service grew by 73%, representing more than 1,500 active accounts in Latin America. Moreover, crypto has seen transcendental progress in regulatory matters, with Brazil leading the way.
In spite of this progress, 2022 was undoubtedly a difficult year for the crypto industry. Yet at Bitso, we believe that the gray episode the industry faces will only strengthen it in the long run. The pressure has mounted for crypto companies to provide their clients with signs of security, trust and transparency. And so now is when the industry’s regulation, along with the compliance measures, and internal practices of its participants, have gained an even greater sense of importance.
Last week, the Brazilian Congress approved bill 4401/21, a legislation aimed at creating a regulatory framework for all crypto companies operating in Brazil. All that will take for the bill to become a law is the President’s approval. This is huge news, not only because it took 7 years to get this text through Congress, but also because Brazil has become one of the few countries in the world to have a robust regulation for cryptocurrency service providers. The Brazilian crypto industry will now have the clarity players and consumers need to develop the biggest market for crypto in Latin America.
Bitso has followed the bill closely since we began operating in Brazil in early 2021. We’ve participated in public hearings and sent several contributions, which have been incorporated into the text approved by the Congress. We held discussions with a vast range of congress members – from right to left -, members of the Executive Branch, and regulators interested in the matter in order to present Bitso’s perspective on the proposed regulation. Additionally, we drove the historical coalition composed of Fintech Associations, Crypto Associations and the Brazilian Banking Federation that summed up as one voice to emphasize the need for the bill to be voted on urgently.
We’re incredibly excited that the work to make the Brazilian crypto industry safer, more transparent, and more secure has come through.
Here are the highlights of the bill:
- Recognizes the legitimacy of crypto business
- Provides legal certainty for clients, investors, and companies
- Establishes an authorization for exchanges to operate in Brazil
- Establishes guidelines for exchanges to follow regarding corporate governance, risk-based approach, data protection, and safety, consumer protection and anti-money laundry practices
- Creates penalties for those who commit fraud using crypto
This is just the tip of the iceberg, though. Under the law, the President will appoint a regulatory body to create the necessary secondary regulation to iron out specifics and oversee the crypto industry. This regulatory body is expected to be the Central Bank, who will open public consultations to create the necessary remaining regulations.
At Bitso, we celebrate this big win for the crypto industry and all of its clients. The bill legitimizes the technology, gives legal security to investors and ensures consumer rights. The effects will also trickle down into the Brazilian economy, as the bill creates a competitive advantage for Brazil, allowing its crypto industry to generate more jobs and attract investments.
While further regulations for the industry are developed, it is important that industry players continue to educate users and the general public on the best and safest practices to approach the industry. This will be key to guarantee that current and future regulations create an environment that is robust enough to protect users, and flexible enough to foster innovation.
