Brazil Considers Bill to Create $16.5B National Bitcoin Reserve

Brazil is on the verge of creating its very own National Bitcoin (BTC) Reserve of $16.5 billion. The Brazilian lawmakers are prepared to discuss the bill that will establish a national Bitcoin reserve. The Bill 4501/2024, titled “Provides for the formation of a Sovereign Strategic Reserve of Bitcoins by the Federal Government and provides other measures,” is scheduled for debate in the lower chamber of Congress on August 20.

The bill says that 5% of Brazil's foreign reserves, which is about $16.5 billion based on central bank data from January, should go to Bitcoin (BTC). The goal is to spread the country's exposure to traditional fiat currencies so that it is less vulnerable to changes in exchange rates and geopolitical threats.

If this law passes, Brazil would be one of the first countries in the world to make a national Bitcoin reserve official. The plan has already passed many congressional committees and is getting a lot of attention since it could change Brazil's financial policy.

The bill designates the Brazilian Central Bank to handle the acquisition, custody, and management of the Bitcoin holdings. Semi-annual reports would be mandated to ensure transparency and accountability. Representative Eros Biondini, the bill’s chief proponent, emphasized that although Brazil ranks among the top countries for Bitcoin adoption, this has not translated into proactive government policy, putting the country at a strategic disadvantage.

“This is a necessary step to modernize Brazil’s reserve strategy and align with future-proof financial infrastructure,” Biondini stated. He also suggested that the reserve could potentially be used as collateral for Drex, Brazil’s upcoming central bank digital currency (CBDC), which is still in its testing phase.

Even though it seems like both parties support the law, recent political unrest could make things more difficult for it. The arrest of former President Jair Bolsonaro has made things worse, and some opposition politicians have warned that they would not show up to subsequent sessions, which could prolong or stop the discussion.

If Brazil's Bitcoin reserve plan works, it might set an example for other Latin American governments that are thinking about using cryptocurrencies as part of their monetary policy. The world will be watching intently as the country talks about whether or not digital gold should be in its treasury.