Brazilian Congressman Introduces Bill For A Bitcoin Strategic Reserve
Brazil’s legislature is exploring an economic strategy to incorporate Bitcoin into its sovereign reserves with an allocation of up to $18.6 billion
Introduced on 25 November 2024, by Congressman Eros Biondinion, the Sovereign Strategic Bitcoin Reserve(RESBit) bill proposes to allocate close to 5% of Brazil’s $355 billion reserves to Bitcoin through phased purchases.
The bill essentially seeks to shield the economy from currency volatility, geopolitical risks, and financial instability, positioning Brazil alongside countries like El Salvador in exploring the economic potential of cryptocurrency.
El Salvador’s pioneering adoption of Bitcoin as legal tender in 2021 serves as a case study for Brazil’s proposal. With nearly 6,000 BTC worth $542 million held in reserves, El Salvador claims to have reaped economic benefits such as enhanced financial inclusion and increased foreign investment.
Brazil’s draft legislation explicitly cites El Salvador’s approach as an inspiration, suggesting that Bitcoin could offer similar opportunities for diversification and economic stability on a much larger scale.
By capping Bitcoin’s share at 5% of reserves, the plan aims to strike a balance between leveraging cryptocurrency’s advantages and mitigating risks associated with its volatility.
Blockchain technology would ensure transaction transparency, while artificial intelligence would monitor and secure operations.
A technical advisory committee, including security and financial experts, would oversee the reserve’s management, providing safeguards against potential mismanagement.
In fact, Stablecoins dominated this trade, accounting for 70% of transactions, highlighting a growing appetite for digital assets among Brazilians. Cumulative figures paint an even more striking picture; from January to September 2024, Brazil imported $13.7 billion worth of crypto assets, up 60% from $8.4 billion during the same period in 2023.
Brazil’s Evolving Regulatory Framework For Virtual Assets
Brazil has been steadily refining its approach to regulating virtual assets since first acknowledging cryptocurrencies in 2014. The Central Bank of Brazil (BCB) excluded them from earlier electronic payment regulations while issuing policies to clarify their status.
The BCB has spearheaded several initiatives to integrate digital assets into the country’s financial ecosystem. Key milestones include the establishment of a Financial and Technological Innovations Laboratory in 2018 and the formal launch of the Real Digital central bank digital currency project in 2021.