On Friday, Federal Deputy Paulo Martins submitted the idea 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 them.
While crypto-assets are not a 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.
Brazil’s new proposal will not make crypto a legal tender
It would not make Bitcoin or any other cryptocurrency legal tender in the nation. 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, cryptocurrencies like Bitcoin (BTC) and Ether (ETH) might be used to pay for products and services all around the country. It might also be used to settle outstanding debts “in the case of a crypto asset offering or forced restriction.”
The plan also covers the new rights and restrictions that Brazilian courts will have once a cryptocurrency is recognized as a financial instrument, such as the ability to freeze exchange accounts.
However, the proposal does not grant the court the authority to seize users’ private keys:
“The following regulations shall be followed: The Judiciary will not have access to the users’ private key.”
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 right to order “intermediaries” such as exchanges to freeze the debtor’s crypto assets if they retain their crypto on exchanges.
The proposed amendments are still being debated in the country’s legislative chamber, the Chamber of Deputies. This means the Senate may take several years to pass the amendments and the president to sign them into law. They may have radically changed by then.