During the first congressional public hearing on a Strategic Bitcoin Reserve proposal in Brazil, Luís Guilherme Siciliano, head of the International Reserves Department at the central bank, said that adopting the bill would increase risks to the nation’s reserve portfolio.
Central Bank of Brazil Argues Holding Bitcoin Would Increase Foreign Reserve Risks
The Central Bank of Brazil took a critical stance on the possible approval of a Strategic Bitcoin Reserve initiative. During a public congressional hearing this week, where several government actors discussed the pros and cons of passing Bill 4501/2024 — which would allow the central bank to purchase up to 5% of its foreign reserves in bitcoin — a bank representative said that bitcoin lacks the requirements to become a reserve asset.
Luís Guilherme Siciliano, head of the International Reserves Department at the Central Bank of Brazil, noted that central bank legislation does not contemplate using 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.
Furthermore, he highlighted that bitcoin as a reserve asset was still a rarity, and that only 3% of central banks were considering similar moves. To conclude, he stressed that, according to internal reports, holding 5% of Brazil’s reserves in bitcoin would increase the risks associated with these, due to the incompatibility and uncertainty of crypto assets.
Oppositely, Pedro Guerra, Chief of Staff of the Ministry of Development, Industry, Commerce, and Services, highlighted the possibilities that adopting bitcoin as a reserve asset might bring to Brazil. He declared:
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.
The public hearing will help lawmakers decide whether to vote in favor of or oppose this legislation, which will have to be approved by both representatives and senators before being enacted.
Read more: Brazilian Lawmakers to Discuss Strategic Bitcoin Reserve Bill