Brazilian Lawmaker Proposes to Give Digital Currencies New Status and Legal Recognition

Brazilian Member of Parliament Paulo Martins has proposed to amend an existing Brazilian law to allow digital currencies to be used for payments without giving them legal tender status.

Martins’ proposal, which was submitted to the parliament, is targeted at modifying Article 835 of Brazil’s Civil Procedure Code. It will add that while digital currencies are not currencies of themselves, they can be “used as financial asset, means of exchange or payment, or instrument of access to goods and services or investment.”

The proposed amendment would give digital assets the status of financial assets for investments and other uses. The proposal would provide the legal system with new powers over digital assets.

One of these is the ability to confiscate digital assets. Courts will be able to freeze digital assets held by a debtor with intermediaries like exchanges. They will also be able to hold and liquidate digital assets to settle debts.

“In the event that the debtor’s assets are not located, the creditor may request the competent Court to issue a notice, by electronic means, to the intermediaries involved in operations with crypto-assets, so that assets corresponding to the amount executed are blocked,” the bill states.

The bill has been forwarded to the President for his signature and will give the executive powers to create oversight bodies for the industry. It also recognizes digital assets as “digital representations of value that can be traded or transferred by electronic means.”