According to Aureo Ribeiro, a federal deputy in Brazil, Bitcoin might soon be legal tender in the country, just as it already is in El Salvador.
Nation-states seem to have a love-it-or-hate-it relationship with Bitcoin, but fewer and fewer are indifferent towards the cryptocurrency. After China banned Bitcoin, Brazil may just be the next country to come out in favour of it and actually adopt it as legal tender. That is, if you are to believe Aureo Ribeiro, a federal deputy who announced that approval of Bill 2.303/15 would open up new use cases to bitcoin holders. Buying houses, cars, and even fast food would become possible.
The so-called “Brazilian Bitcoin Law” has been in development for a couple of years and may become a role model for other countries if it is to be passed. Ribeiro is also bullish about how the law would protect citizens from Ponzi schemes in the crypto sector, a problem that has seriously slowed down the widespread adoption cryptocurrencies are gearing for. Brazilians, in particular, have been a target of those and Ribeiro was positive that the law would separate the wheat from the chaff, create regulations for trading, and knowing where and from whom people would be buying. Thus, according to Ribeiro, it would be only a matter of time before the law would be passed.
Brazilian markets react positively
Several news outlets reported on the news and, unsurprisingly, Bitcoin influencers on Twitter were delighted by the announcement. As a result, Bitcoin trades in Brazil spiked, with a 100% increase in trading volume compared to a few days before the announcement.
Is Bitcoin really going to replace the Brazilian Real?
However, upon closer inspection, the “Brazilian Bitcoin Law” does not mention replacing, or at least complementing, the existing currency. It would rather regulate the use of cryptocurrencies for investment purposes and open up the possibility for them to become a means of payment if overwhelming consumer demand were to exist. It would also increase the penalties for the use of crypto for money laundering, scams, and pyramid schemes. In conclusion, Bitcoin could play a greater role as an investment tool, but whether it would be used as a means of payment in the future is an entirely different issue.
High hurdles for making Bitcoin legal tender
So far, El Salvador is the only country that has made the courageous, and some would argue foolish, move to make bitcoin legal tender. Although financial inclusion and the cheaper cost of remittances are positives, having crypto as legal tender does not come without risks. If big sections of the population do not have access or skills to use the new currency, the potential financial inclusion might backfire. Crypto volatility is another well-known problem that has evoked fierce protests by Salvadorians themselves.
All that said, countries like Brazil are actively monitoring developments in El Salvador and will draw conclusions based on it. While Bitcoin might not become legal tender immediately, its future looks bright.
