On December 8, 2021, Brazil’s Chamber of Deputies (the lower house of the National Congress) approved Bill of Law 2303/15 (Projeto de Lei 2303/15), which would regulate and provide guidelines for virtual asset service providers.
Defining Virtual Assets and Service Providers
The bill defines virtual assets (ativos virtuais) as “the digital representation of values that can be negotiated or transferred through electronic means.” (Projeto de Lei 2303/15, art. 3.) This definition of virtual assets excludes digital representations of national and foreign currency, electronic money, or other assets already regulated by law. (Art. 3(I, II, IV).) Under this law, service providers would be considered the legal entities that, on the behalf of third parties, execute virtual asset services, such as exchanges between virtual assets and national and foreign currency, exchanges between one or more virtual assets, and the transfer and administration of virtual assets. (Art. 4.)
Regulation of Virtual Asset Service Providers
An act of the executive branch would appoint the regulatory body or bodies responsible for the supervision of virtual asset service providers. (Art. 6.) Federal Deputy Expedito Netto, the spokesperson (relator) of the bill, stated that it is almost certain that Brazil’s Central Bank will be indicated as the regulatory body.
Under this bill, virtual asset service providers would be able to function in Brazil only through “previously obtained permission from the authorizing body or public administration entity indicated by the Executive Branch.” (Art. 2.) In addition to the regulatory body’s established parameters, service providers would be required to observe the bill’s guidelines, such as good practices of governance, protecting personal data, preventing money laundering, and financing terrorism, among others. (Art. 4.)
Punishment for Virtual Asset Crimes
The bill would amend the Penal Code (Código Penal, Decreto-Lei No. 2.848, de 7 de dezembro de 1940) to outline the definition and penalties for fraud using virtual assets. (Art. 10.) Fraud involving virtual assets would be penalized with imprisonment of four to eight years and a fine. (Art. 10.) The bill would also increase the penalty for crimes defined in Law No. 9,613 (Lei No. 9.613, de 3 de março de 1998), which regulates money laundering crimes and concealment of assets, if the crimes are perpetrated through virtual assets. (Art. 12.) Currently, such crimes not perpetrated through virtual assets are punishable by three to 10 years of imprisonment and a fine. (Lei No. 9.613, art. 1.) Bill of Law 2303/15 would increase the penalty for these crimes if they are committed repeatedly through virtual assets. (Bill of Law 2303/15, art. 12.)
On December 9, 2021, the Federal Senate received Bill of Law 2303/15 for review. As the reviewing chamber, the Federal Senate can either approve, reject, or amend the bill. (Constituição Federal art. 65.) If the bill is approved, it will be sent to the president of the republic for final approval or veto. (Art. 66.) If the Federal Senate rejects the bill, the bill will be filed in the archives of one of the two legislative houses, depending on the circumstances. (Art. 65.) If the Federal Senate amends the bill, it must be returned to the Chamber of Deputies, the chamber that initiated the bill. (Art. 65, sole para.)Prepared by Elizabeth Marin, Law Library intern, under the supervision of Eduardo Soares, Senior Foreign Law Specialist