The Brazilian proposal would legalize crypto payments and protect private keys
The proposed law would not necessarily create crypto legal tender in the country, but it would at least be a legally recognized financial asset for investment and other uses.
The proposed addition to current Brazilian law would grant Brazilians the right to use cryptocurrency as a means of payment while preventing their private keys from being taken by the courts.
Federal Deputy Paulo Martins delivered the proposal to the country’s legislature on June 10. If passed, the bill would expand both the legal uses of cryptocurrency in Brazil and the power the courts would have in removing it.
The proposed addition to Section 835 of the Code of Civil Procedure states that although the cryptocurrency is not a currency in itself, it can be “used as a financial asset, means of exchange or payment, or instrument of access to goods and services or investment.”
It will not necessarily create bitcoin or any crypto legal tender in the country. This will instead turn crypto into a legally recognized financial asset for investment and other uses.
A broader explanation of the proposal suggests that cryptocurrencies such as BTC or ETH could be used to pay for goods and services across the country. It can also be used to pay off arrears of crypto-assets “ “in the event of offering or forced constriction” of crypto assets.”
The proposal also discusses new capabilities and limitations after crypto was recognized as a financial asset in Brazilian courts, such as depositing exchange accounts.
However, the proposal also stopped giving the court the power to confiscate users’ private keys.
“The following rules will be observed: Access, by the Judiciary, to the users’ private key is prohibited.”
A creditor must send their crypto payment to the court wallet to confirm its validity. The proposal does not specify how the court will obtain the crypto from the self-guarded wallet.
For those who keep their crypto on exchanges, the court would have the power to force “intermediaries” such as exchanges to halt the debtor’s crypto assets.
“If the debtor’s assets are not located, the creditor may request the competent court to issue an ex officio, by electronic means, to the intermediaries involved in operations with crypto-assets, so that assets corresponding to the amount executed are blocked.”
The planned additions are still in the early phase of debate in the Chamber of Deputies within the country’s law. This means that it could take several years before the additions are passed by the Senate and signed into law by the president. By that time, they may have changed radically.
Only El Salvador and the Central African Republic know it. Tonga is considering following in their footsteps.
