At the end of the month of December, the bill that regulates companies operating in the crypto market in Brazil (PL 4,401/21) was enacted into law by the President, without veto and will enter into force on June 20, 2023.
The novelty caught the attention of the crypto market, mainly companies specializing in services related to virtual assets and investors, considering that the bill had been blocked for 5 months. With the official publication of the text, services providers of virtual assets must adapt themselves to the law according to a term to be established by the regulatory body to be created in the furture, which term will not be less than 6 months.
In addition, the approved bill establishes that the rendering of services of virtual assets must follow guidelines such as: (i) free initiative and free competition; (ii) good governance practices; (iii) information security and data protection; (iv) protection and defense of consumers and users; and (v) prevention of money laundering and terrorist financing; among others.
What is noticeable is the concern of the legislature to bring greater security to the crypto market with the establishment of guidelines in the field of security of user information and data (LGPD), the defense of consumer rights in relation to companies (consumer rights), given the financial risks inherent in this market, and in the criminal area, creating specific punitive norms to prevent fraud and illegal acts in the market.
The spotlight was also focused on the definition of what the law considers a virtual asset, “the digital representation of value that can be traded or transferred by electronic means and used to make payments or for investment purposes”.
The following were left out of the definition of virtual assets: (i) national currency and foreign currencies; (ii) electronic money; (iii) instruments compared to loyalty program points and rewards; (iv) representations of assets whose issuance, book-keeping, negotiation or settlement is provided for by law or regulation, such as securities and financial assets, the latter being regulated by the Brazilian Securities Commission (CVM).
One of the great questions of the market still remains unanswered. The law does not provide a clear definition of what a “pure” virtual asset is and when it is confused with a security (and therefore subject to CVM regulation and the capital markets law).
The great discussion related to the bill, which was the obligation of asset segregation between companies and investors, was left out of the approved text. This theme ended up becoming recurrent in the Senate and in the Deputies Chamber with the bankruptcy of the FTX brokerage (owned by founder Sam Bankman-Fried), in the United States, and the damage it caused to the 50 largest clients amounting to approximately US$ 3.1 billion, as per information from the market.
Would the asset segregation be established, investors’ assets could not be used by brokers, which would guarantee the protection of the net worth of clients in the event of bankruptcy of these companies. However, according to brokers, this measure would make it impossible to offer products considered essential in the market, such as loans of crypto assets.
As this is a novelty, only time will tell to verify whether the legislator’s option to bring security to the market was correct. What we can be said is that legal discussions will continue to arise regarding the regulation of such assets, being necessary the constant follow-up by investors and specialized people in the area.