After the collapse of FTX, Brazilian crypto advocates are urging lawmakers to give final approval on a bill aimed at boosting oversight of the sector.
Roberto Dagnoni, a top executive at SoftBank-backed exchange MercadoBitcoin, said the law had been kind of dormant during the election period but needed to be a priority.
If there is a good side to the FTX disaster, it would be that it gets the law prioritized, he told Reuters on Tuesday. The rules that are currently there haven't been applicable to some players, so they can do whatever you want. The bill, passed earlier this year by the Senate and now awaiting lower chamber approval, would require all locally active criptocurrencies to have a physical entity in the country, and require disclosure of suspected money laundering and other criminal activities. Fines and even imprisonment are outlined in the text.
According to 2022 Chainalysis data, Brazil is one of the top 10 active markets for cryptocurrencies in the world.
Fernando Furlan, a former president of the country's blockchain association, said he hoped that the FTX saga would be a push enough to get the law passed.
Furlan said that this was a healthy trade-off, despite the fact that the law may make it harder for so-called 'dot com' exchanges and smaller groups to operate due to higher reporting standards.
He added that if it's good for Brazilian investors, it's a good law.
The law could be passed sooner than anticipated.
The Lower House Speaker Arthur Lira said the chamber was ready to vote on the law before the end of the year, according to Folha de S. Paulo.
The president of Brazil's securities regulator said in a public panel that it is important that we start to have rules in criptocurrency, and that the bill is very close. Despite Luiz Inacio Lula da Silva's victory in presidential elections, some key actors are skeptical that the bill will pass so quickly, given the budget issues that have taken priority in the year 2023, according to some key actors.
Lira didn't reply immediately to a request for comment.
FTX filed for bankruptcy last week and is facing scrutiny from the U.S. authorities, amid reports that $10 billion in customer assets were shifted from the exchange to FTX founder Sam Bankman- Fried's trading company Alameda Research.
FTX did not have a large presence in Latin America.
MercadoBitcoin, which is mainly active in Brazil and Portugal, has no exposure to FTX, having developed its own custody solution to store customer assets, according to Dagnoni.
Despite mass withdrawals globally, he said that his exchange had even seen net positive volume flows.
He said that people are separating asset and bad management.