Congressional Hearing on Strategic Bitcoin Reserve Proposal in Brazil
During the inaugural congressional public hearing regarding a Strategic Bitcoin Reserve proposal in Brazil, Luís Guilherme Siciliano, who heads the International Reserves Department at the central bank, expressed concerns that the adoption of the bill could elevate risks to the nation’s reserve portfolio.
The Central Bank of Brazil adopted a critical viewpoint on the potential approval of the Strategic Bitcoin Reserve initiative. At a public congressional hearing this week, various government representatives deliberated the advantages and disadvantages of Bill 4501/2024 — a proposal that would permit the central bank to acquire up to 5% of its foreign reserves in bitcoin. A representative from the bank asserted that bitcoin does not meet the criteria necessary to qualify as a reserve asset.
Luís Guilherme Siciliano remarked that the current central bank legislation does not recognize bitcoin as a reserve asset. At the hearing, he stated:
The IMF classifies Bitcoin as a non-financial, non-produced asset, similar to land and mineral resources. This means that bitcoin is treated as a capital instrument, not a financial instrument or reserve asset.
Additionally, he pointed out that considering bitcoin as a reserve asset remains uncommon, with only 3% of central banks contemplating such actions. To conclude his remarks, he emphasized that internal reports suggest that holding 5% of Brazil’s reserves in bitcoin would heighten the associated risks, owing to the uncertainties and incompatibilities surrounding crypto assets.
In contrast, Pedro Guerra, the Chief of Staff of the Ministry of Development, Industry, Commerce, and Services, outlined the potential advantages that accepting bitcoin as a reserve asset could offer Brazil. He stated:
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The adoption of bitcoin is a revolution for public finances. Brazil becomes a strategic player in leadership; we can effectively take the lead and realign the incentives of our economy.
This public hearing will assist lawmakers in determining whether to support or oppose the legislation, which must receive approval from both representatives and senators before it can be enacted.
