Brazil's Bitcoin Reserve Bill passes initial review, moving closer to using 5% of foreign exchange reserves ($18 billion) to buy BTC.

The Brazilian Chamber of Deputies has passed the initial review of the Bitcoin Reserve Bill, allowing for the use of up to 5% of foreign exchange reserves to buy Bitcoin, potentially leading to a global trend for central banks to follow. (Background: Brazil passes Bitcoin reserve proposal: up to 5% of foreign reserves to buy BTC, setting a precedent for G20 countries) (Additional context: Retail investors cry! Brazil cancels tax exemption on cryptocurrencies, imposing a unified 17.5% income tax) The largest economy in South America, Brazil, aims to bring Bitcoin to a national level. According to Bitcoin News, the Brazilian Chamber of Deputies has already passed the first round of deliberation for PL 4501/2024, which authorizes the central bank and the Ministry of Finance to allocate up to 5% of foreign exchange reserves to Bitcoin and establish a national cold wallet named RESBit. NEW: Brazil's Bitcoin Reserve Bill 4501/2023, proposing "RESBiT" to allocate up to 5% of foreign exchange reserves to Bitcoin, passes its first committee. If implemented, Brazil would be the second LATAM country after El Salvador to establish a legal BTC reserve. pic.twitter.com/c3DYsqlzvl — Bitcoin News (@BitcoinNewsCom) June 17, 2025 Bill details: 5% allocation, cold wallet custody, semi-annual auditing This PL 4501/2024 bill was proposed by Congressman Eros Biondini. Based on Brazil's approximately $370 billion in foreign reserves, the 5% cap amounts to $18 billion to $19 billion. The bill stipulates that: The Brazilian central bank and the Ministry of Finance will jointly decide and execute the purchases. Bitcoin must be placed in a cold wallet, audited by an independent third party every six months. An artificial intelligence system will continuously monitor transactions and flag any anomalies. Audit reports must be made public online to ensure transparency and accountability. The proponent emphasized that more than half of Brazil's foreign reserves are held in US dollar assets, necessitating risk reduction and return enhancement. Biondini stated in Congress: "The total supply of Bitcoin is fixed, serving as insurance against dollar inflation and geopolitical risks." Future Outlook The bill requires the central bank to submit audit reports to Congress every six months to ensure the safety and transparency of the holdings. Supporters point out that the returns on US dollar assets are under pressure from the US deficit and loose policies, while diversifying into fixed-supply Bitcoin can reduce exchange rate risks; however, opponents are concerned that high volatility may impact national accounts, with Bitcoin's 30-day annualized volatility averaging over 45% in the past year. Overall, analysts believe that if Brazil successfully legislates, it could accelerate other emerging countries' assessments of Bitcoin as "digital gold." The bill still needs to pass reviews from the technology, finance, and Senate committees. Although the road ahead is still long, this step has reignited discussions on diversifying global central bank asset allocations. Whether Brazil can open a new chapter for the nation to accumulate Bitcoin remains to be seen.