The Brazilian Lower House is about to hold a discussion session on a bill to establish a Bitcoin reserve fund, with a potential scale of up to $15 billion, sparking a broad debate about the role of digital assets in national economic security strategy.
The Brazilian Lower House has officially scheduled a hearing on August 20 to review a groundbreaking bill: establishing a national Bitcoin reserve fund. This move places Brazil among the pioneering countries considering the role of digital assets in macroeconomic strategy, while igniting a fierce debate among policymakers about the future of national finance.
The hearing will bring together key stakeholders, including the Central Bank of Brazil (BCB), the Ministry of Finance, along with representatives from fintech and traditional banking. The discussion will focus on the bill submitted in November 2024, which would allow the government to allocate up to 5% of the national treasury to purchase Bitcoin.
Based on the current foreign exchange reserves of around $300 billion, this would equate to a potential investment of up to $15 billion – a significant commitment for an asset considered highly volatile. The bill's stated goal is to protect national reserves from exchange rate fluctuations and geopolitical risks, while promoting blockchain technology application in the financial system.
If approved by the Lower House, the bill would need to go through the Senate approval process before being presented to President Luiz Inácio Lula da Silva for signing. This process is expected to be lengthy and face numerous challenges, especially given the cautious attitude of financial institutions.
The bill has created a clear division among Brazilian policymakers. Supporters, led by Pedro Giocondo Guerra – the Vice President's Chief of Staff, view Bitcoin as "digital gold" and assert that discussing a sovereign reserve fund is crucial for national prosperity. This argument emphasizes Bitcoin's potential as a tool for preventing inflation and economic instability, similar to gold's traditional role in reserve portfolios.
Conversely, the cautious faction, led by official financial institutions, has voiced opposition. Nilton David, BCB's monetary policy director, affirms that incorporating a highly volatile asset like cryptocurrency into national foreign exchange reserves is "inappropriate". This perspective reflects deep concerns about systemic risks and the stability of strategic funds.
Brazil's move is not occurring in a vacuum but is part of a global trend reshaping the concept of national reserve assets. Following former US President Donald Trump's executive order establishing a strategic Bitcoin reserve fund, other countries like Kazakhstan have announced similar plans, creating a wave of "Bitcoinization" of national reserves.
Currently, the US, China, and the UK are identified as the economies holding the largest amounts of Bitcoin, setting a precedent for other countries to consider digital assets as a component of diversification strategy.
