A proposed addition to an existing Brazilian law would give Brazilians the right to use cryptocurrency as a means of payment while protecting their private keys from being taken by the courts.
Federal deputy Paulo Martins sent 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 courts would have to seize it.
BRAZIL: Bill presented to #bitcoin and crypto to be recognized as a means of payment!
— Bitcoin Archive (@BTC_Archive) June 14, 2022
The proposed addition in article 835 of the Code of Civil Procedure establishes that although crypto assets are not currency in themselves, they could be “used as a financial asset, a means of exchange or payment, or an instrument of access to goods and services or investment .”
It would not necessarily make Bitcoin or any cryptocurrency legal tender in the country. Instead, it would make cryptocurrencies a legally recognized financial asset for investments and other uses.
A broad interpretation of the proposal suggests that cryptocurrencies like BTC or ETH could be used to pay for goods and services across the country. It could also be used to pay outstanding debts “in the event of a forced offer or constriction” of crypto assets.
The proposal also discusses the new powers and limitations that Brazilian courts would have once cryptocurrencies are recognized as a financial asset, such as freezing exchange accounts.
However, the proposal also stopped short of giving the court the power to seize users’ private keys.
“The following rules will be observed: Access by the Judiciary to the private password of users is prohibited.”
A debtor would have to send their crypto payment to the court wallet to ensure its validity. The proposal does not mention how the court would obtain crypto from self-custodial wallets.
For those who hold their cryptocurrencies on exchanges, the court would have the power to force “intermediaries” such as exchanges to freeze the crypto assets of the debtor.
“In the event that the debtor’s assets are not located, the creditor may request the competent Court to issue ex officio, by electronic means, to the intermediaries that participate in operations with cryptoactives, so that the assets corresponding to the amount are blocked. executed. .”
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The proposed additions are still in the initial phase of discussion in the Chamber of Deputies within the country’s legislature. This means it could be several years before the Senate approves the additions and the President signs them into law. By that time they may have changed drastically.
Only El Salvador and the Central African Republic recognize Bitcoin as legal tender. Tonga is considering following in his footsteps.