Brazilian Congress revives bill to acquire 1M BTC for strategic Bitcoin reserve

The Brazilian Congress has reintroduced bill 4501of 2024, proposing the acquisition of up to 1 million BTC for Brazil’s strategic Bitcoin reserve. The bill significantly expands the scope of the previous document, establishing that RESbit (Strategic Sovereign Bitcoin Reserve) will accumulate the BTC over 5 years.

Initially, the bill proposed spending up to 5% of Brazil’s foreign reserves to diversify the national treasury’s assets with an asset immune to inflation. The asset should also be immune from third-party confiscation, which the country’s central bank will manage as part of the national treasury. 

Additionally, the bill proposes a range of changes, including incentivizing company Bitcoin holdings and mining, accepting Bitcoin payments for federal taxes, and banning the sale of Bitcoin seized by judicial authorities.

It also establishes that the reserve should serve as an asset diversification mechanism, reducing reliance on traditional assets. 

Federal Deputy says bill proposes $68B expenditure for 1M BTC

Luiz Gastão, a Federal Deputy for the state of Ceará, emphasizes that the bill will include spending at least $68 billion for the 1 million BTC acquisition plan if approved by the necessary commissions and passed by the Brazilian Congress. The BTC stash would exceed the reserves of nations like the U.S. and China. 

Deputy Gastão also stresses that the bill guarantees fundamental rights related to the use and custody of digital assets. These include the right to self-custody, the free transfer of assets, and the confidentiality of transactions, except when express authorization or a specific court order is issued.

However, it faces conflict with current central bank regulations, which do not yet recognize BTC as a reserve asset. Any administrative action restricting transfers to user-controlled wallets shall also be declared null and void.  

According to Gastão, these guarantees are essential to stimulate investment, consolidate an innovative economic ecosystem, and create legal certainty. The text also argues that protecting individual autonomy in the digital environment is compatible with the goals of preserving public funds and strengthening the population’s purchasing power. 

Meanwhile, in addition to direct BTC purchases, the bill authorizes other forms of accumulation, such as collecting taxes paid in Bitcoin, temporarily holding shares of BTC-backed spot ETFs in emergencies, and even hoarding by public companies. 

On the other hand, the management of these assets would be divided between Brazil’s central bank and the Ministry of Finance. The Internal Revenue Service would have 12 months after the law is enacted to create the necessary technological infrastructure.

The next steps include analysis by the Finance and Taxation Committee, the Constitution and Justice Committee, and the Science, Technology, and Innovation Committee.

Bill proposes using Bitcoin as Drex collateral

Bill 4501/2024 further proposes that Bitcoin serve as collateral for the digital real (Drex), the Brazilian central bank’s digital currency. The law, if enacted, positions Bitcoin as both an investment and a tool for monetary sovereignty. 

Meanwhile, the author of the bill, Congressman Eros Biondini (PL-MG), who has also been advocating for the crypto market in Congress, recognizes the scarcity and security properties of the Bitcoin network. He considers these characteristics superior or complementary to traditional gold and dollar reserves.

Additionally, the Brazilian central bank would be required to publish semi-annual reports about the project to the National Congress. The documents will detail the state-owned portfolio’s custody, transactions, and performance. 

There are also plans to partner with international organizations to exchange best-practice experiences. Article 6 addresses the accountability of RESBit managers, providing for administrative and criminal sanctions for mismanagement or non-compliance with the law’s regulations, including the obligation to reimburse public funds.

The Executive Branch must carry out the regulation of the future law within 180 days of its publication.

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