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Brazil Announces Blockchain Regulatory Sandbox

Brazil Announces Blockchain Regulatory Sandbox

Four financial authorities in Brazil have co-announced a new blockchain regulatory sandbox in the South American country, with a long-term intent to adapt new regulations to manage the rise and development of fintech and other related products such as crypto.

The new regulatory sandbox has now appeared after much expectation following the earlier announcement by the Financial Supervision Counsel of Brazil on the regulation of crypto in line with money laundering laws, and an order two weeks ago on the commissioning of a committee for crypto regulation.

Blockchain development can now be freely tested within this safe environment, to be overseen by Brazil’s Ministry of Finance, the Central Bank of Brazil, the Securities Commission, and the Superintendent of Private Insurance. Together, they hope to understand better the concepts and implementation of blockchain within this sandbox, while allowing for new ideas in fintech.

The initiative is mainly driven by an increase in commercial activity, especially with emerging tech, said the regulators:

“The use of innovative technologies as distributed ledger technology, blockchain, robo-advisors and artificial intelligence has allowed the rise of new business models, reflecting a bigger offer and reach.”

The Treasury’s secretary also said that the use of blockchain in Brazilian financial markets could open the doorways for crypto and even fundraising models like token offerings. The country reportedly holds the most crypto owners in Latin America, while holding 5th place globally. It has been estimated that 8% of Brazilians will own some digital asset by the end of the year.

 

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Bitcoin Comes with Advantages Says Brazilian Presidential Candidate

Brazilian presidential candidate for the upcoming October elections in that country João Amoêdo has recently expressed pro Bitcoin views.

Amoêdo’s Brazil New Party aims for the privatization of public enterprises like Petrobras, Central Bank of Brazil and Banco do Brasil. Although the party supports welfare programs like Bolsa Família, it aims to privatize the public health system and public education. The state would give vouchers for health and education to people who couldn’t afford it, according to Wikipedia.

In terms of the country’s financial system, the party opposes extensive regulation in many aspects of Brazilian society. They believe the central bank should be independent of the state. When asked about cryptocurrency, Amoêdo said that Bitcoin comes with “advantages.” On the development of blockchain in Brazil, he was particularly upbeat about its place in the country’s economy.

“I see the blockchain as a protocol that increases the reliability and integrity of the data. There are obvious applications, such as for interbank transfers or to register as a notary. Another, not so commented, is to use the blockchain to follow the productive chain of products…. We could follow every step of the production chain of a product, ensuring less bureaucracy and more intelligence.”

When quizzed whether he thought that Cryptocurrency’s had a role in a new Brazil and whether it might be used as legal tender, he responded:

“As a means of payment, I see no doubts that bitcoin can be understood as a legal payment method. If both parties want to exchange a product via bitcoin… I do not see any legal barriers to doing so” adding:

“I do not think they are a threat to the traditional banking system. I see advantages in providing another means of payment for consumers,”

With a population of nearly 200 million and the largest economy in Latin America, Brazil is a significant economic force, and an increase in the adoption of cryptocurrency use would certainly have an impact under a liberal government, which on the whole tend to be more favorable towards crypto. It’s hard to say what stance Amoêdo would take regarding the sector if he becomes the new Brazilian president in October.  Like any other politician, he would want to be seen as a staunch supporter of the country’s national currency, the real, which is tightly pegged to the US dollar. On this he commented:

“But it must be clear that the country has only one national currency, one that has a legal course, that is, the one that people are obliged to accept, the real. No other currency, including the dollar, has this characteristic. Only the real. In addition, there are restrictions on the use of the dollar for payments and as a currency of account, which are the same for any other foreign currency, including crypto-coins.”

He suggests that governments must be made aware of the public’s assets held on-line as the internet shouldn’t become a “tax haven.”

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Brazil’s Central Bank Reveals Blockchain Data Sharing Platform for Regulators

Brazil’s central bank, Banco Central do Brasil (BCB), announced on Tuesday details of a new data sharing platform for use by the country’s financial regulators.

Blockchain security

BCB detailed that the new blockchain-backed platform would provide a secure channel for relevant, domestic regulators to share data. Blockchain has been praised by BCB for providing an immutable data chain, as well as a horizontal information network.

The platform is being called ‘Pier’ and will assist in professional data exchanges, including punitive processes and the management of corporate entities that BCB oversee. The use of blockchain will allow each member to authenticate the source and origin of the content.

The blockchain on which Pier has been built is not disclosed, although in an interview last November, a spokesperson for BCB said that proof of concept was being developed on four platforms including Ethereum and JPMorgan’s Quorum.

Pier is currently in the final stages of testing at the Department of Informatics (deINF) at the Federal University of Maranhão, where much of the technical development took place. The launch is planned for the end of 2018.

Several entities cited to use Pier include the country’s Superintendency of Private Insurance (SUSEP), the Brazilian Securities and Exchange Commission (CVM) and National Superintendency of Complementary Pensions (PREVIC).

Still anti-Bitcoin

Despite the central bank’s successful blockchain experimentation, the president Ilan Goldfajn last year condemned Bitcoin, likening it to a pyramid scheme. He continued on to describe it as a ”typical bubble”, and a facilitator of illicit online activities.

Goldfajn made a point to separate technology companies from practices facilitated by Bitcoin.

Blockchain technology has been accepted and appreciated by institutions on a much greater scale than cryptocurrencies, with even NASA conducting deep space research this year on the Ethereum blockchain.

 

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