Author: Ana Paula Pereira, CoinTelegraph; Translated by: Bai Shui, Golden Finance
A recently proposed bill in the Brazilian Congress plans to establish a sovereign federal Bitcoin reserve, which could reshape the country's attitude towards digital assets.
The bill was introduced on November 25 by Congressman Eros Biondini, aiming to establish a sovereign strategic Bitcoin reserve called RESBit.
According to the legislation, Bitcoin reserves can protect the country's sovereign reserves from currency fluctuations and geopolitical risks, while also serving as collateral for the country's upcoming central bank digital currency 'Real Digital' (Drex).
Sovereign reserves are a pool of assets held by a country's central bank, typically used to support the country's legal tender, stabilize the economy, and support international trade. As of December 2023, Brazil has $355 billion in reserves, primarily supported by assets pegged to global legal tender such as the US dollar.
According to the proposed legislation, Bitcoin reserves will supplement existing financial assets through phased purchases, up to 5% of the country's reserves. With the support of a technical advisory committee composed of security experts, the country's central bank will still manage assets through a public system supported by blockchain and artificial intelligence technologies.
Brazil's RESBit bill. Source: House of Representatives
The bill turns El Salvador towards Bitcoin as an example of progress. This Central American country adopted Bitcoin as legal tender alongside the US dollar in 2021, seeking to enhance financial inclusion and encourage foreign investment.
Since then, the Salvadoran government has been actively purchasing Bitcoin, holding nearly 6,000 Bitcoin worth $542 million as of November 26.
According to the proposed legislation in Brazil, Bitcoin has helped El Salvador achieve economic diversification over the past four years.
The bill also includes penalty clauses for RESBit violations or mismanagement, stating that offenders may face administrative or criminal sanctions.
The legislation is currently under review by the President of Brazil's House of Representatives, and once approved, will be submitted to the committees for debate.
Brazil has been advancing guidelines for digital assets. In June 2023, the country implemented a legal framework granting the central bank the authority to regulate and supervise virtual asset service providers. Additionally, tokens qualifying as securities continue to be regulated by the country's securities commission.
