Crypto regulation in the world: weekly digest #138

USA

The bill for establishing a U.S. crypto reserve, specifically focusing on Bitcoin, has been reintroduced by Senator Cynthia Lummis. This legislation, known as the BITCOIN Act, aims to create a Strategic Bitcoin Reserve by authorizing the federal government to purchase up to one million Bitcoins over five years. The bill aligns with President Donald Trump's recent executive order establishing a Strategic Bitcoin Reserve, although it differs in its approach to acquiring additional Bitcoin assets.

The bill proposes purchasing up to one million Bitcoins, valued at approximately $80 billion, over a five-year period. The purchases would be funded through diversifying existing funds within the Federal Reserve system and adjustments to Treasury certificates for the Fed's gold holdings. The acquired Bitcoins would be stored in a decentralized network of secure facilities across the U.S. and managed by the Treasury Department. All purchased Bitcoins would be held for at least 20 years, with restrictions on selling more than 10% of the reserve every two years.

The bill builds on President Trump's executive order, which established the Strategic Bitcoin Reserve using seized cryptocurrencies. However, Lummis' proposal involves purchasing additional Bitcoin, which contrasts with the administration's emphasis on budget-neutral approaches.

Recently, Texas has also proposed acquiring up to $250 million in Bitcoin, reflecting a broader trend of institutional acceptance of cryptocurrencies in the U.S..

Bolivia

Bolivia, after lifting ban on cryptocurrencies, is turning to cryptocurrency for energy imports as it faces a severe shortage of U.S. dollars and a worsening fuel crisis. The state-owned energy company, Yacimientos Petrolíferos Fiscales Bolivianos (YPFB), has been authorized by the government to use digital assets for purchasing fuel. This marks a significant policy shift, especially after Bolivia lifted its long-standing ban on cryptocurrencies in June 2024.

Bolivia's natural gas exports, once a major source of foreign currency, have dwindled due to a lack of new discoveries and declining production. This has led to a financial crisis, with insufficient foreign currency reserves to sustain fuel imports. The country is also experiencing long lines at gas stations, protests, and highway blockades due to diesel shortages. Farmers and transport operators have also threatened strikes, exacerbating economic disruptions.

A Supreme Decree now allows YPFB to conduct transactions using cryptocurrencies and acquire foreign currency from financial institutions. These measures aim to maintain national fuel subsidies and ensure energy imports despite financial constraints.

While the system for cryptocurrency payments is in place, YPFB has not yet conducted its first transaction using digital assets. This move aligns Bolivia with other South American nations like Argentina and Brazil, which have integrated cryptocurrencies into their financial systems. However, challenges such as legal uncertainties and crypto volatility remain concerns for the success of this strategy.

Earlier, Venezuela's state-owned oil company, PDVSA, announced that it has been using the stablecoin Tether USDT for oil exports. This move was accelerated after the U.S. reimposed sanctions on Venezuela's oil sector in 2024. PDVSA requires new customers to make payments in USDT, often through intermediaries to comply with sanctions. The use of cryptocurrencies like USDT allows Venezuela to avoid having its oil sale proceeds frozen in foreign bank accounts due to sanctions.

Brazil

Brazil has proposed using blockchain technology and cryptocurrencies to enhance trade among BRICS countries during its presidency. This initiative aims to improve the efficiency of cross-border transactions by leveraging blockchain's capabilities for secure, fast, and cost-effective transactions. The focus is on streamlining import and export processes, reducing reliance on intermediaries, and lowering transaction costs, rather than creating a common currency to compete with the U.S. dollar.

The proposal involves using blockchain to create a more efficient and secure payment system for BRICS trade. This technology can facilitate transactions in local currencies, reducing the need for the U.S. dollar. Unlike previous discussions about a BRICS common currency, the current plan focuses on improving transaction efficiency without challenging the dollar's dominance directly.

Brazil's Central Bank is working on the Drex project, which aims to create a tokenized infrastructure for financial transactions. However, it faces challenges in balancing privacy and regulatory oversight. Another option could be a network similar to Brazil's Pix system, though this raises concerns about governance and sovereignty.

By facilitating transactions in local currencies, BRICS nations can reduce their reliance on the U.S. dollar, potentially mitigating risks associated with geopolitical tensions. The initiative aims to create a more resilient and self-sufficient economic bloc by leveraging blockchain technology.

News from other countries:

• Russia is planning to allow cryptocurrency trading for a new category of «super-qualified» investors as part of a broader effort to regulate its digital asset market. The proposal introduces a new category of investors, which is expected to include professional market participants and individuals with high financial and expertise standards. However, the specific criteria for this category are still being defined.

• El Salvador's government, led by President Nayib Bukele, has resisted pressure from the International Monetary Fund to halt its Bitcoin purchases and scale back its cryptocurrency policies. Despite a $3.5 billion IMF financing deal that includes reforms prohibiting further government accumulation of Bitcoin, Bukele has publicly affirmed that the country will continue buying and holding Bitcoin. Recently, El Salvador disclosed the purchase of additional tokens, bringing its holdings to over 6,100 BTC, worth approximately $530 million at current prices.

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