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- Brazil continues to prohibit cryptocurrency donations to political parties and election candidates.
- Authorities require full donor identification to ensure transparency in campaign financing.
- Regulators have also banned betting on election results ahead of the upcoming elections.
Brazilian authorities have reinforced the country’s ban on crypto donations to political parties and election candidates ahead of the upcoming national elections. The Federal Public Prosecutor’s Office (MPF) published an article on June 22 explaining the reasons behind the restriction and reminding voters, candidates, and political organizations about the existing rules.
According to the MPF, the ban on crypto donations continues to apply from December 2019, when Resolution 23.607/2019 was adopted by the Superior Electoral Court (TSE). The restriction covers all cryptocurrency contributions to electoral campaigns and applies to all political parties and campaign activities conducted across the country. Brazil is set to hold crucial elections.
Voters will cast their ballots on October 4 to elect state and federal representatives, senators, governors, and the president. If none of the candidates secures the necessary majority, a second round of voting will occur on October 25 for the governor and president positions.
Election Authorities Reject Crypto Campaign Funding
In accordance with MPF, transparency occupies a central position when it comes to the prohibition on cryptocurrency donations. Brazilian electoral law obliges authorities to identify each donor and oversee the sources of campaign funding.
Methods of donation in the form of bank transfers and PIX payments enable authorities to verify the identities of donors and keep track of the finances. In contrast, cryptocurrencies pose certain difficulties since addresses cannot necessarily disclose information about people behind transactions.
As stated by MPF, it becomes more difficult to trace contributors and identify the origins of campaign funding due to the above characteristic of cryptocurrencies. For regulators, verification of the identities of donors becomes an indispensable measure to prevent irregular financing and influence in elections.
For this reason, authorities continue prohibiting campaign contributions using methods that allow them to monitor finances and ensure accountability. Despite the prohibition on cryptocurrency donations, political candidates remain able to collect funds through online crowdfunding projects. Such actions become legal in Brazil under certain circumstances.
Brazil Sets Rules for Crypto Donations in Election Campaigns
All the contributors should be able to provide proper identification, and the campaigns should operate using authorized platforms by the Superior Electoral Court. Authorities set up these restrictions to provide transparency while allowing candidates to take advantage of digital funding options.
There are various repercussions for violating the guidelines for funding the campaign. There can be fines imposed, money needs to be returned to the National Treasury in case of improper receipts, and investigations for the abuse of economic power are carried out.
Campaign finance is not the only area where Brazilian regulators monitor things closely. At the beginning of this year, the Central Bank of Brazil banned gambling on the outcomes of elections. This regulation affected prediction markets, even international ones, which provide contracts linked to political events.
Some of those companies also find themselves under investigation in other countries. The official election campaign will start on August 16. Candidates will be able to conduct their activities via public events, digital platforms, and media.
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