Brazilian Proposal Would Legalize Cryptocurrency Payments And Securing Private Keys

A proposed amendment to a Brazilian legislation would allow Brazilians to utilize cryptocurrency 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 legislature. If passed, the measure would broaden both the legal uses of cryptocurrencies in Brazil as well as the ability of courts to seize it.

While crypto assets are not currency in and of themselves, they could be “used as a financial asset, means of exchange or payment, or instrument of access to goods and services or investment,” according to the proposed addition to Article 835 of the Civil Procedure Code.

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

According to one interpretation of the plan, cryptocurrency 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 debts “in the case of a crypto asset offering or forced restriction.”

Brazilian courts will have once cryptocurrency is recognized as a financial instrument

However, the proposal does not grant the court the authority to seize users’ private keys.

“The following rules will be observed: Access, by the Judiciary, to the users’ private key is prohibited.”

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

The court would have the authority to order “intermediaries” such as exchanges to freeze the debtor’s crypto assets if they retain their crypto on exchanges.

“In the event that 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 proposed amendments are still being debated in the country’s legislative chamber, the Chamber of Deputies. This means that the Senate may take several years to pass the amendments and the president to sign them into law. They might have altered dramatically by then.

Bitcoin is only legal tender in El Salvador and the Central African Republic. Tonga is debating whether or not to follow in their footsteps.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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