Brazil’s Congress evaluates the Bitcoin Reserve as a hedge against international challenges.

Introduced on November 25 by Congressman Eros Biondini, the proposed bill outlines the creation of a Sovereign Strategic Bitcoin Reserve (RESBit), potentially redefining the nation’s approach to digital assets.

The legislation suggests that a Bitcoin reserve could protect Brazil's sovereign wealth from currency volatility and geopolitical risks. It could also serve as collateral for the country’s upcoming central bank digital currency, the Real Digital (Drex).

Sovereign reserves typically consist of assets a central bank holds to back the national currency, stabilize the economy, and facilitate international trade. 

As of December 2023, Brazil held $355 billion in reserves, predominantly in assets tied to global fiat currencies like the US dollar. The proposed BTC reserve would complement these holdings, capped at 5% of the total reserves, acquired through gradual purchases.

The central bank would manage the Bitcoin reserve via public systems leveraging blockchain and artificial intelligence technologies, supported by a technical advisory committee of security experts. The proposal cites El Salvador’s adoption of Bitcoin as legal tender in 2021 as a case study in progress. 

Since embracing Bitcoin, El Salvador has actively acquired the cryptocurrency, holding nearly 6,000 BTC worth approximately $542 million as of November 26, 2024. According to the bill, El Salvador’s Bitcoin strategy has contributed to its economic diversification over the past four years.

The draft law includes penalties for mismanagement or noncompliance with RESBit’s governance, ranging from administrative measures to criminal sanctions.

Now under review by the Speaker of Brazil’s House of Representatives, the legislation will proceed to committees for further discussion upon approval.

This development aligns with Brazil’s broader strides in digital asset regulation. In June 2023, the country implemented a legal framework granting its central bank oversight of virtual asset service providers, while tokens classified as securities remain under the jurisdiction of Brazil’s Securities and Exchange Commission.