Brazil Congress to Consider Bitcoin Reserves as a Hedge Against Global Risks

Author: Ana Paula Pereira, CoinTelegraph; Compiler: Baishui, Golden Finance

A newly introduced bill in the Brazilian Congress plans to establish a sovereign federal Bitcoin reserve, which may reshape the country's attitude towards digital assets.

The bill was introduced by Congressman Eros Biondini on November 25 to establish a sovereign strategic Bitcoin reserve called RESBit.

According to the legislation,The Bitcoin reserve 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).

A sovereign reserve is a pool of assets held by a country's central bank, typically used to support the country's fiat currency, stabilize the economy, and support international trade. Brazil has $355 billion in reserves as of December 2023, mostly backed by assets pegged to global fiat currencies like the U.S. dollar.

Under the proposed legislation, Bitcoin reserves would be supplemented with existing financial assets through phased purchases of up to 5% of the country’s reserves. The central bank would still manage the assets through a public system powered by blockchain and artificial intelligence technologies, with the support of a technical advisory committee of security experts.

Brazil’s RESBit bill. Source: House of Representatives

The bill cites El Salvador’s move to Bitcoin as an example of progress. The Central American country made Bitcoin a legal tender alongside the U.S. dollar in 2021, seeking to enhance financial inclusion and encourage foreign investment.

Since then, the Salvadoran government has been actively buying Bitcoin, holding nearly 6,000 Bitcoins worth $542 million as of November 26.

According to the draft law proposed in Brazil, Bitcoin has helped El Salvador diversify its economy over the past four years.

The bill also includes penalty provisions for violations or mismanagement of RESBit, stating that violators may face administrative or criminal sanctions.

The legislation is currently under review by the speaker of Brazil’s House of Representatives and, once approved, will be submitted to various committees for debate.

Brazil has been advancing guidelines for digital assets. In June 2023, the country implemented a legal framework that grants the central bank the power to regulate and supervise virtual asset service providers. In addition, tokens that qualify as securities continue to be regulated by the country's Securities and Exchange Commission.