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Brazil
5.33 Neutral Environment
Brazil
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The Central Bank was the first among Brazilian regulators to speak about cryptocurrencies in February 2014. The Bank warned against buying cryptocurrencies, pointing out their weaknesses and the threats associated with their expanded use. A few months later, in April 2014, the Receita Federal (RF), Brazil's tax authority, clarified its position on cryptocurrency taxation: the users who use cryptocurrency as a means of exchange are exempt from tax, while investors must pay the capital gains tax. In July 2015, the PL 2303/2015 bill was submitted for consideration by the Chamber of Deputies, which included virtual currencies in the legal framework. The regulators were both in favor and against the bill. However, it never reached the voting stage, and the PL 2060/2019 bill was introduced instead on April 4, 2019, that determined the legal status of cryptocurrencies and established penalties for criminal activities related to them. The bill is currently being considered.
Twelve crypto exchanges are currently registered in Brazil. Society shows high interest in cryptocurrencies as well; according to Cointrader Monitor, local crypto exchanges registered a turnover of more than 100,000 BTC in just 24 hours on April 10, 2019. Some organizations accept payments in bitcoins. There are two major blockchain associations with more than 35 members each that are actively involved in the process of shaping the regulatory framework.
Neutral Political Environment
6.0 points
Most of the institutional political entities in Brazil take part in the discussion around blockchain and cryptocurrency. The Central Bank has the most multipronged position: the regulator points to both positive and negative aspects of blockchain technology in its statements and studies, although cryptocurrency itself is viewed in a rather negative light. The Parliament and the Government emphasize possible blockchain and cryptocurrency applications, as well as the threats associated with their expanded use. However, the latter are referred to as something that needs to be overcome. Blockchain associations have the most positive attitude to the development of the industry; they only emphasize its strengths and potential benefits. Negative position is taken by banks and courts: the former emphasize the use of cryptocurrency in criminal activities, while the latter make no reckoning of the special needs of the crypto business in their activities.
Rather not Enabling Legal Environment
2.52 points
Regulatory Convergence
There is no special legislation regulating legal relations in the field of blockchain and cryptocurrency in Brazil. Some legal relations are regulated by analogy, following explanations of regulators, and a part of activity remains unregulated. There is no special authority responsible for the regulation of cryptocurrencies and blockchain and resolving controversial issues. The main regulators are: The Chamber of Deputies of Brazil, the Securities and Exchange Commission (CVM) and the Federal Tax Service (RF). In general, there are no serious contradictions in the approaches of the regulators.

Definiteness of Legal Regulation
Individual legal relations arising in connection with cryptocurrencies and blockchain technology are regulated by analogy in accordance with the current legislation, the application of which regulators clarify in their instructions (in particular, the activities of investment funds and the "crypto assets" transactions taxation). At the same time, a significant part of the activities remain unregulated: mining, the activities of crypto exchanges and crypto wallets (including in terms of AML/KYC), the legal status of obligations arising from blockchain is not defined, either.

Stability of Legal Regulation
The last year saw changes in the rules governing relationships involving cryptocurrencies. The judicial practice also lacks unified attitude towards cases related to cryptocurrencies. The Chamber of Deputies is currently considering a bill introduced on April 4, 2019 that determines the legal status of cryptocurrencies and establishes penalties for criminal activities related to them.

Adequacy of Legal Regulation
Since Brazil currently lacks special legislation regulating relations in the field of blockchain and cryptocurrency and only a small part of the activities are regulated by analogy, while judicial practice hardly takes into account the specifics of the crypto business in its judgments, we can only speak about neutral regulation.
Situation with the Rule of Law
Brazil ranks 58th in the Rule of Law Index. The conditions of the legal regulation of blockchain and cryptocurrencies are neutral, and since the values of the sub-criterion of the rule of law are low (0.53), the amount of the difference between weighted (multiplied by the Rule of Law Index score) and unweighted assessments is significant.
Rather Enabling Infrastructure Environment
7.47 points
Brazil ranks 58th in the UN Global E-Government Development Index.

The index of business infrastructure development in Brazil is not too high — the country ranks 109th out of 193 countries.