Brazil Considers Crypto Payments for Salaries Under New Bill

Highlights:

• Brazil may allow workers to receive part of their salaries in Bitcoin under a new legislative proposal.
• The bill requires at least half of employee wages to be paid in Brazilian real to protect national currency use.
• Lawmakers seek to boost crypto adoption by following payroll models from Japan, Portugal, and Switzerland.

Lawmakers in Brazil are evaluating a proposed bill that will allow businesses to pay their staff’s wages using virtual currencies such as Bitcoin. The bill, however, requires that at least 50% of each salary must still be paid in the national currency, the Brazilian real. According to the bill, employees cannot receive their full salaries in crypto.

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However, independent contractors and foreign workers may receive full crypto payments under certain contractual agreements. The bill outlines that salary payments in virtual assets are prohibited when it comes to 100% of wages, except for expatriate employees and independent service providers.

The conversion rate of crypto payments must rely on rates established officially by institutions approved by the Central Bank of Brazil. Luiz Philippe de Orleans e Bragança, who is a descendant of Brazil’s former royal family and a federal deputy for São Paulo, believes that introducing crypto payments could benefit the financial technology sector and attract more crypto investment to the local economy. The bill also promotes more freedom in arrangements between employers and workers. However, this must not affect basic labor rights.

Brazil’s Push Toward Crypto Integration

The proposal draws motivation from crypto regulations established in countries that have integrated digital currencies within their payroll systems. Japanese employers can use cryptocurrencies for wage payments but need mutual employee-employer consent before such transactions become possible. The Portuguese government established rules that foster virtual asset adoption within their national financial framework. The Swiss government accepts cryptocurrency payments for use across different sectors, which also extends to payroll systems.

However, the use of digital currencies as payment methods remains restricted in many countries. The use of digital currencies for salaries and transactions remains restricted in both Turkey and Russia. In contrast, El Salvador became the first country to adopt Bitcoin as legal tender in 2021. While citizens can still receive payments in Bitcoin, the country no longer accepts taxes or government fees in crypto. This is after its recent agreement with the International Monetary Fund.

What’s Next for the Proposal?

The payroll proposal must undergo several stages to become a federal law. The legislation will move to the Senate after being approved in the Chamber of Deputies. Once approved by all bodies, the president will either approve it or send it back to the floor. The exact period required for the bill to move through the houses may be influenced by political reasons that might come into play.

Brazil has supported the growth of cryptocurrencies in the country by issuing licenses to crypto exchanges and other platforms. Recently, the government granted a broker-dealer license to Binance. The central bank is also working on a digital currency to expand digital payment options. The proposed law will provide greater flexibility for businesses and their employees.

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