Brazil’s congress will discuss a bill that regulates companies operating in the cryptocurrency sector and increases penalties for crypto pyramid schemes and other illegal activities.
A special commission of the Brazilian House of Representatives already approved the bill presented on Sept. 29. If approved by the plenary, the legislation, which was introduced by federal deputy Aureo Ribeiro, would force “virtual asset service providers to follow rules of communication of financial transactions, with identification of customers and recordkeeping,” according to a Portuguese-language text published on the Brazil congressional website.
The bill would also increase the penalty for money laundering crimes using virtual currencies, including bitcoin.
Currently, the penalty for money laundering in Brazil consists of imprisonment for three to 10 years and a fine, according to the chamber’s website. If the bill passes, penalties for crypto-related fraud would be four to over 16 years imprisonment, plus a fine.
The proposed law would give companies operating in the sector 180 days to adapt to the new regulations.
The bill comes as more Brazilians are investing in cryptocurrencies and awareness of the sector has widened. João Manoel Pinho de Mello, director of the Central Bank of Brazil (BCB), recently said that a significant migration from paper currency to digital means of payment will take place in the next few years, and BCB President Roberto Campos Neto has said Brazil could be ready for a digital currency in 2022.
In July, Mercado Bitcoin, the largest crypto exchange in Brazil, raised $200 million in a Series B funding round from the SoftBank Latin America Fund and became the first Brazilian crypto unicorn after it got a $2.1 billion valuation.
Ribeiro’s bill covers a wide range of companies that provide crypto-related services such as exchange and custody.
According to the bill, “only institutions authorized to operate by the Central Bank of Brazil may exclusively provide the service of virtual assets, or accumulate it with other activities.” That will occur within the framework of a regulation issued by an agency or entity chosen by the executive branch of the country, the website text added.
The House of Representatives announced that the proposal must be analyzed at a general session of the lower house but didn’t specify when that debate will take place.