Brazilian President Signs Bill to Use Seized Crypto for Public Security

The president of Brazil, Luiz Inacio Lula da Silva, has signed the Legal Framework for Combating Organized Crime Bill into law. With the move, crypto and assets connected to criminal organizations can now be seized and forfeited with a court order.

Law No. 15.358 targets organized crime in the country as part of the law enforcement crackdown.

Law Expands Court Authority to Seize Crypto Assets

The enactment of the law is not surprising, given that the President sent the bill to the Brazilian legislature last year. However, it includes several provisions that redefine how authorities will deal with seized crypto assets.

Under the new law, judges can freeze or block crypto assets, even during investigations, upon the prosecutor’s request and without informing the accused. All that is required is sufficient evidence of a serious crime.

These are part of preemptive measures, with judges also authorized to suspend access to crypto exchanges, wallets, and online financial platforms for suspects even before conviction. Article 8 provides for all these measures, noting that it can be decreed without hearing the accused.

However, it goes further to prescribe how forfeiture of such assets must happen, including the sharing of the funds. Depending on who is responsible for the action, the funds will be allocated to the Public Security Fund of the state or federal district.

Interestingly, it goes further to allow early sale of crypto assets even before conviction, once there is a clear link to illegal activity. The law also scapegoats the use of privacy tools or encrypted messaging apps to hide criminal activity, noting that this could attract harsher penalties.

Brazil Pulls Back on Crypto Taxation Plans as Adoption Grows

Meanwhile, the legislative efforts are a reaction to the growing adoption of crypto in Brazil. The country has one of the highest levels of crypto adoption in Latin America, with some of this coming from illicit activity by organized crime groups.

With one criminal group, PCC, reportedly crypto to launder $2.4 billion, the crackdown is not surprising. However, other regulations targeting crypto have also raised eyebrows.

A key one is the crypto tax law, which the government recently postponed until after the October 2026 election. The country currently has a fixed 17.5% capital gains tax on crypto, which it introduced last year.

However, there are reports that the government wants to introduce additional taxes on digital assets and increase regulatory oversight of the sector. Sources claim the decision to softpedal on the plans is due to the upcoming elections and potential pushback over the new taxation.