Brazil plans to create a national bitcoin reserve

A Brazilian congressman has proposed a bill to create a national bitcoin reserve — Reserva Estratégica Soberana de Bitcoins (RESBit). According to the initiative, up to 5% of the country's international reserves, which are expected to reach $372 billion by September 2024, would be converted into the first cryptocurrency.

Why is this needed?

This mechanism could become an effective tool for protecting the economy, serving as a hedge against currency fluctuations and geopolitical instability. Moreover, it will play a significant role in supporting and developing the country's national digital currency, called Drex.

Who will manage It, and how will It work?

Management of the reserve is planned to be entrusted to the central bank and the Ministry of Finance. Blockchain and artificial intelligence technologies will be employed, and government officials will be trained based on international expertise. Administrators will report to Congress every six months. Non-compliance with the rules will result in administrative and criminal penalties.

The project bears similarities to the American Bitcoin Act 2024, proposed by one of the senators.

In 2022, Brazil recognized the first cryptocurrency as an official means of payment, and a year later, passed a law expanding the central regulator's powers to oversee virtual assets.