Recently, the topic of 'Bitcoin reserves' has been heatedly discussed by U.S. President-elect Donald Trump, crypto-friendly congresswoman Cynthia Lummis, and MicroStrategy founder Michael Saylor, who call for using Bitcoin to solve national debt issues. Although some think tank scholars have criticized this idea as 'too optimistic and overreaching', it has not stopped other countries from following suit, and Brazil has recently begun to incorporate 'Bitcoin reserves' as part of its economic strategy.
Bitcoin will account for 5% of the national reserves, approximately $16.6 billion.
Brazilian Congressman Eros Biondini recently proposed the 'Bitcoin Reserve' bill, named RESBit. The proposal states that the purpose of the Bitcoin reserve is to reduce Brazil's exposure to global currency fluctuations and geopolitical risks.
As of October 2024, Brazil's total sovereign reserve assets have reached $332 billion, primarily consisting of international fiat currency-related assets such as the US dollar. The new bill stipulates that the proportion of Bitcoin reserves may reach a maximum of 5% of the total national reserves (approximately $16.6 billion), and Bitcoin will be purchased in phases.
Bitcoin reserves will become the guarantee mechanism for Drex, managed through blockchain and AI.
The bill specifically mentions that the Bitcoin reserve will not only stabilize the economy but also serve as a guarantee mechanism for Brazil's central bank digital currency, Drex. The Bitcoin reserves will be managed by the Brazilian central bank through a blockchain system and AI, with professional advice provided by a technical advisory committee composed of security experts.
Learning from El Salvador, to assist in diversified economic development
The proposal specifically references El Salvador as a case study. In 2021, El Salvador adopted Bitcoin as legal tender, alongside the US dollar, to promote financial inclusion and attract foreign investment. As of November 11, 2024, the Salvadoran government currently holds approximately 6,400 Bitcoins from both purchases and mining.
(Only 7.5% of respondents in El Salvador have used cryptocurrency transactions, and President Bukele admits that Bitcoin has not yet become mainstream)
The Bitcoin reserve proposal has been submitted to Congress for review.
The proposal also contains clear management specifications, including standards for managing RESBit. If losses occur due to mismanagement or violations, the responsible parties will face administrative penalties or criminal prosecution.
Additionally, Brazil is gradually advancing regulations for digital assets. Brazil officially launched digital asset regulations in June 2023, authorizing the central bank to oversee virtual asset service providers (VASPs), while tokens recognized as securities are still managed by the Brazilian Securities and Exchange Commission (CVM). Currently, this 'Bitcoin Reserve Bill' is under review by the Brazilian Chamber of Deputies, and if approved, further discussions will be held with relevant committees.
This article, Brazil is also crazy about Bitcoin reserves: proposal to reserve $16.6 billion as a guarantee for the central bank's digital currency Drex, first appeared in Chain News ABMedia.
