Historic: Cryptocurrency Assets Are Now Legally Seizable in Brazil

In a historic decision, the National High Court of Brazil decided that when funds are not available for seizure in the banking system, judges can directly send letters to cryptocurrency exchanges to investigate if debtors have crypto and seize it.

National High Court of Brazil Establishes Cryptocurrency May Be Seized for Debts

Cryptocurrency is being acknowledged and integrated into the international legal and economic system. The National High Court of Brazil (STJ) issued a landmark decision establishing that crypto could be seized as payment for outstanding debts.

The case, which has now put the digital assets system in the sights of the judicial system, enables a new set of opportunities to redeem debts from actors that have not used the traditional finance system for storing funds.

The court based its decision on the fact that cryptocurrencies are assets liable to taxation, whose transactions must be reported to the Federal Revenues Service, and even if not legal tender, these can be used as a form of payment and a store of value.

Nonetheless, in its decision, the entity recognizes that there are operational difficulties regarding seizing digital assets, as they can be moved out of the regulated exchanges. In this sense, the court commented that a new system designed to facilitate this kind of action is already being developed.

The ruling states that:

The implementation of a system like this will undoubtedly make it simpler and faster to search for crypto assets owned by the executed party and carry out the respective seizure on them.

The appeal solves a controversy created by an earlier request to a court to seize cryptocurrency assets. Before, the First Chamber Reserved for Business Law of the Court of Justice of Sao Paulo denied this request, arguing that there is a lack of regulation regarding the commercialization of these assets in Brazil.

In the same way, it also established that allowing these searches would break the financial confidentiality of the executed party without adding any value to solve the creditors’ requirements.

Read more: Federal Revenue Agents Might Seize Bitcoin From Travelers in Brazil

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