Brazil is also crazy about BTC reserves: Proposal reserves $16.6 billion as Central Bank digital currency Drex collateral.

Recently, the topic of ‘BTC reserves’ has been hyped by the US President-elect Trump, encryption-friendly Senator Cynthia Lummis, and MicroStrategy founder Michael Saylor, calling for the use of BTC to solve the national debt problem. Although some think tanks and scholars have directly criticized this idea as ‘too optimistic and unrealistic’, it still cannot stop other countries from following suit. Recently, Brazil has also begun to use ‘BTC reserves’ as part of its economic strategy.

BTC will account for 5% of the national reserves, approximately 16.6 billion US dollars.

Brazilian Congressman Eros Biondini recently proposed the “BTC Reserve” bill, named RESBit. The proposal states that the purpose of the BTC reserve is to mitigate the impact of global currency volatility and geopolitical risks on Brazil.

Brazil’s total sovereign reserve assets currently stand at US$332 billion (as of October 2024), mainly in international Fiat currency-related assets such as the US dollar. In the new law, the proportion of BTC reserves will reach up to 5% of the total national reserves (about $16.6 billion), and BTC will be purchased in phases.

BTC reserves will become the Drex collateral mechanism, managed by blockchain and AI.

The bill specifically mentions that in addition to stabilizing the economy, BTC reserves also serve as a collateral mechanism for Brazil’s Central Bank digital currency Drex. The BTC reserves will be managed by the Brazil Central Bank through the blockchain system and AI, and professional advice will be provided by a technical advisory committee composed of security experts.

Drawing from El Salvador to support the development of a diverse economy

The proposal specifically mentions El Salvador as a reference case. El Salvador made BTC a legal tender in 2021, alongside the US dollar, to promote financial inclusion and attract foreign investment. As of November 11, 2024, the Salvadoran government currently holds a total of approximately 6,400 BTC, including comprehensive purchases and mining income.

(Only 7.5% of respondents in El Salvador have used cryptocurrency transactions, President Bukele admits that BTC is not yet popular)

The BTC reserve proposal has been submitted to Congress for review

The proposal also contains clear management regulations, including the management of the RESBit standard. If losses are caused by mismanagement or violation of regulations, the persons responsible will face administrative sanctions or criminal investigation.

In addition, Brazil is gradually advancing the regulation of digital assets. Brazil officially launched digital asset regulations in June 2023 and authorized the Central Bank to supervise Virtual Asset Service Providers (VASPs), while tokens recognized as securities are still regulated by the Brazil Securities and Exchange Commission (CVM). Currently, the “BTC Reserve Bill” has been submitted to the Brazilian Chamber of Deputies for review and will be further discussed with relevant committees if approved.

This article Brazil is also crazy about BTC reserves: proposed reserves of $16.6 billion, as Drex collateral for Central Bank digital currency, first appeared in Chain News ABMedia.