Brazilian Bitcoin Regulation: A new study looking at the economic impact of Bitcoin on behalf of Brazil’s Federal Senate has advised against the regulation of digital currencies – at least for now.
The 18 page report by Cesar Rodrigues van der Laan has been hailed by some digital currency enthusiasts for recommending a ‘Bitcoin friendly’ approach to regulation, but at the same time presents a generally pessimistic analysis of Bitcoin’s chances of future success within the Brazilian economy.
“Given their limited current range, especially in Brazil, we do not see systemic risk to the operation of the domestic economy,” the report reads.
In addition to advising the Senate to hold off on any new regulation until Bitcoin has spread further throughout the Brazilian economy, the report’s author also recommends that the country follow a ‘similar approach’ to the US treasury, whose stance on digital currency regulation is seen as being amongst the most friendly, as opposed to that of countries such as Russia which has cracked down on Bitcoin use with harsh criminal laws.
By suggesting a US inspired approach the report seems to endorse an April decision by the Receita Federal, Brazil’s tax authority, to treat digital currencies as financial assets for tax purposes.
Whilst the report’s willingness to allow Bitcoin some breathing space before being subject to regulation seems to based largely on the view that it will not gain widespread adoption within the country, it does seem more bullish on the currency’s popularity with international business and the chances of it achieving more widespread adoption as a mechanism for cross border payments. In this area, the report is clear that if current trends continue a strong regulatory framework will be required:
“If there were lessons of the recent financial crisis is the consensus that globalized financial systems need more and not less regulation. For these reasons, it is difficult to consider plausible the hypothesis sovereign currencies be replaced by unregulated virtual currencies and without legal support.” it reads.
