According to new proposals to existing Brazilian law, crypto payment may become legal soon. Also, the amendment will protect the private keys of crypto users from court orders.
As a result, a court can not give orders to seize the key of a crypto wallet. However, it has the power to order exchanges to freeze the crypto assets.
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New Proposal Does Not Make Crypto Legal Tender
Paulo Martins, the Federal Deputy in the legislature, issued the new proposal on June 10th. If passed into law, it would change the crypto landscape in Brazil.
According to Article 835 in the Civil Procedure Code, crypto is not a legal tender. Hence, this new bill does not make crypto a legal tender. It only recognizes it as an investment and payment tool.
In addition, the proposal highlights the limitations and powers of Brazilian courts on crypto. An example of such power is the right to freeze the crypto accounts of debtors.
Fortunately, the new bill will stop the court from seizing the private keys of crypto users. It states that:
“Access of the Judiciary to the private keys of users is prohibited.”
Furthermore, any debtor can make payment to the court’s wallet address. However, the bill did not mention how courts can obtain crypto from unhosted wallets.
New Proposal Allows Court To Freeze Crypto Assets
For users that store their digital currencies on exchanges, the court can still freeze them. First, it would reach out to the exchange. Afterward, the court will order it to freeze the debtor’s crypto. According to the proposal,
“A creditor can request the court to send an order, an ex officio. This will be sent electronically to the crypto exchange firms. They will block the assets that corresponds the money owed.”
Unfortunately, the recent amendment is with the Chamber of Deputies at the preliminary stage. As a result, it may take a while before the Senate passes the bill into law. It is only after that the President can sign it into law. By then, lawmakers may have altered the proposal.
Only the Central African Republic and El Salvador have legalized Bitcoin as legal currency. With the recent fall in the price of Bitcoin, the investment in El Salvador has dipped. However, Tonga may follow the same path soon.