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Brazilian proposal would make crypto payments legal and safeguard private keys

15-Jun-2022 By: Simran Mishra
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Brazilian proposal would make crypto payments legal and safeguard private keys

A proposed amendment to Brazilian legislation would allow Brazilians to utilize cryptocurrencies as a form of payment while also shielding their private keys from being seized by the courts.

On June 10, Federal Deputy Paulo Martins presented the plan to the country's congress. If enacted, the measure would broaden both the legal uses of cryptocurrencies in Brazil as well as the ability of judges to seize them.

While crypto-assets are not a currency in and of themselves, they can be "treated as a capital asset, a mode of exchange or payment, or an instrument of accessibility," according to the proposed amendment.

It would not make Bitcoin or any other cryptocurrency in the country legal money. Instead, it would make cryptocurrency a legal financial instrument that could be used for investing and other purposes.

According to one interpretation of the plan, cryptocurrencies like BTC or ETH might be used to pay for products and services anywhere around the country. It might also be used to settle outstanding obligations in the case of a crypto asset offering or imposed restriction.

The plan also covers the additional rights and restrictions that Brazilian courts would have once a cryptocurrency is recognized as a financial instrument, such as the ability to freeze exchange accounts. However, the plan does not grant the court the authority to seize users' private keys.

To confirm the payment's authenticity, the debtor would have to transmit it to the court's wallet. The plan is silent on how the court would get cryptocurrency from self-held wallets.

The court would have the authority to order "intermediaries" like exchanges to freeze the debtor's crypto assets if they retain their crypto on exchanges.

The proposed amendments are currently being debated in the country's legislative chamber, the Chamber of Deputies. This means that the Senate may take many years to adopt the amendments and the president to sign them into law. They could have altered dramatically by then.

Bitcoin is accepted as legal currency in El Salvador and the Central African Republic. Tonga is contemplating whether or not they should follow their lead.

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