There is a possibility that Bitcoin may be endorsed as a payment method in Brazil. An addition to the Brazilian law was proposed recently, which could enable Brazilians to use crypto for making payments legally. In addition, it will also prevent courts from seizing the private keys of the crypto users in the country.
Legalization of Crypto Payments
Brazil’s Federal Deputy, Paulo Martins, recently put forward a proposal to the country’s legislature. If the proposal is approved, it could result in cryptocurrencies being used legally in Brazil and would also regulate the sector. Some of the regulations include the courts being permitted to confiscate digital assets.
The submitted proposal was added to the Civil Procedure Code. It highlights that even though it is not possible to categorize cryptocurrencies as fiat currencies, it is possible to adopt them as a financial asset, an investment, a means of accessing goods and services, or as a method of payment or exchange.
But, it is important to note that the bill does not mention the use of Bitcoin, or that of any other cryptocurrency, as legal tender in Brazil. The purpose of the bill is to recognized bitcoin and other crypto assets as legal investments and to permit their use in other scenarios. If the law goes into effect, people will be able to use cryptocurrencies like Bitcoin and Ether to pay for different goods and services. In fact, people will also be able to use these crypto assets to pay off their debts.
The Role of the Court
The proposal is question also sheds light on the role the Brazilian courts will play after cryptocurrencies are legalized and given the status of a financial asset. It mentions, both the limitations as well as powers of the courts in this regard. Some of the functions that the court will be allowed to perform include freezing accounts on crypto exchanges.
Nevertheless, it should be noted that the bill does not give courts in the country the power to seize the private keys of any individual. The judiciary will not be allowed access to the crypto wallets of the users. But, the court could ask a debtor to send their crypto payment to wallet that belongs to the court in order to verify it.
There is no mention in the proposal of how the court will be able to receive crypto payments from self-custody wallets. But, it does specify that if the cryptocurrency is stored in crypto exchanges, then the court will have the authority to order the exchange to freeze the account that belongs to the debtor.
However, in the situation where it is not possible to locate the crypto asset of the debtor, then the creditor has another option to explore. They can ask a competent court to issue an order via electronic means to the intermediary who is involved, which is usually a crypto exchange. They can ask the said intermediary to block crypto assets that are relevant to the debt’s amount.