Key Takeaways
- New legislation aims to establish a sovereign Bitcoin reserve for the Brazilian government with the aim to diversify its treasury assets and support the development of the digital real CBDC.
- As per the recommendation by Congressman Eros Biondino, the RESBit strategic reserve could protect the country’s reserves from currency fluctuations and will serve as collateral for the issuance of the Drex digital currency.
- BTC in the reserve will be managed by the country’s central bank, in collaboration with the Ministry of Finance via cold storage wallets. The proposal also requests the utilization of AI and blockchain-powered public monitoring systems, also submitting semiannual reports to Congress.
- Last year, the Brazilian government passed a bill bringing the oversight of virtual asset service providers (VASPs) operating in the country under the central bank’s regime.
On November 25, Congressman Eros Biondino introduced a new bill in Brazil’s National Congress proposing plans to establish a Sovereign Strategic Bitcoin Reserve (RESBit) that would hold up to 5% of the country’s international reserves. The proposal aims to diversify the government’s treasury assets while supporting the development of the country’s central bank digital currency (CBDC).
A sovereign reserve is a state-owned investment fund that manages a pool of assets custodied by a nation’s central bank, including government surpluses, foreign exchange reserves, or revenues from natural resources. The funds are used by the government to achieve various objectives, like stabilizing the economy and supporting international trade.
As of December 2023, Brazil holds $355 billion in its treasury, comprising assets pegged to global fiat currencies, like the US dollar.
Brazilian Lawmaker Proposes Establishment of Bitcoin Strategic Reserve To Protect The Country From Economic Uncertainties
In the bill’s justification, Biondino wrote that the formation of the RESBit is a “strategic measure” that will position Brazil at the forefront of the new digital economy, reducing economic risks while expanding the opportunities for technological and financial development.
As per the legislation, the federal Bitcoin reserve could protect the country’s sovereign reserve from currency fluctuations and geopolitical risks while also serving as collateral for the issuance of its forthcoming CBDC, dubbed the Real Digital (Drex). It also includes a proposal for employing advanced monitoring systems powered by artificial intelligence (AI) and blockchain technology to ensure the integrity of transactions.
The reserve would be co-managed by the Brazilian central bank and the Ministry of Finance, utilizing cold wallets for security. The management will follow the country’s Fiscal Responsibility Law, producing semiannual reports about their work to the National Congress.
The Bitcoin Reserve would complement the nation’s existing financial assets by up to 5% of its reserves through purchases made in multiple phases. The central bank would manage the reserve assets through advanced public monitoring systems, with support from a technical advisory committee formed by security experts.
The legislation also includes provisions for penalties in cases of noncompliance or poor management of the RESBit. The document states that violators could face administrative or criminal sanctions.
Brazil Inspired By El Salvador’s Proactive Approach To Bitcoin
The bill makes references to El Salvador’s transition into a Bitcoin-centric economy. In 2020, the Central American nation made BTC a legal tender alongside the US dollar, intending to enhance financial inclusion and encourage foreign investment. Nayib Bukele’s government has since been actively buying Bitcoin. As of November 26, the government holds nearly 6,000 BTC, worth $542 million at the current rate.
Brazil has also been working on its guidelines for digital assets. Last year, the government implemented a legal framework that granted the central bank the authority to regulate and oversee virtual asset service providers (VASP). The country witnessed a record $90 billion in crypto inflows between July 2023 and June 2024.
The legislation also includes provisions for educational programs to inform the public about interacting with crypto assets. The programs will be implemented through a gradual and controlled acquisition process.
At the time of writing, Bitcoin (BTC) is trading at $93,259 – down 0.53% in the last 24 hours.
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