Judges in Brazil now have the authority to seize Cryptoassets from debtors who have not fulfilled payment obligations, showing increasing recognition that Cryptoassets can serve both as a payment method and a value storage. According to local media reports, the Brazilian Supreme Court agreed to allow sending notifications to cryptocurrency exchanges about the intention to seize assets from debtors' accounts. This decision was confirmed by the Brazilian Supreme Court through a notice published on its website.
Although cryptocurrencies are not legal tender, the council generally acknowledges that they can be used as a payment method and value storage. According to current regulations, Brazilian judges can freeze bank accounts and order withdrawals even without prior notification to the debtor if they determine the debtor is in debt. With this new decision, Cryptoassets are now included in this scope.
Minister Ricardo Villas Bôas Cueva noted that although Brazil still lacks a comprehensive legal framework for cryptocurrencies, some draft laws have recognized them as a "digital representation of value". Despite regulatory uncertainty, Brazil remains a major center for cryptocurrencies. An October report indicated that Brazil ranks second in Latin America for cryptocurrency adoption, only behind Argentina as of June 2024.
Earlier this year, a large cryptocurrency exchange was licensed to operate in Brazil after acquiring an investment company in São Paulo. A representative of the exchange previously stated that Brazil is moving towards regulating the industry and expects a comprehensive legal framework "this year". However, not all of Brazil's regulatory proposals are favorable to the industry.
The central bank has proposed banning Peg transactions on self-custody wallets at a time when many citizens are using Tokens Pegged to USD to avoid depreciation against the Brazilian real. Observers suggest that this ban would be difficult to fully implement, as the government can regulate centralized exchanges, but P2P transactions and decentralized platforms are harder to control.
