- Brazilian President Luiz Inácio Lula da Silva signed a law authorizing law enforcement agencies to use seized crypto to fund their fight against organized crime.
Brazil is accelerating its fight against organized crime. This time, it has established a legal framework that supports the government’s use of seized crypto assets to strengthen law enforcement efforts against high-profile criminals.
Law Granting Brazil’s Authorities to Utilize Seized Crypto
Brazilian President Luiz Inácio Lula da Silva signed the bill into Law No. 15.358 on Tuesday. It generally establishes the legal framework for combating organized crime, paramilitary groups, and private militias.
The broad set of reforms has presented a landmark use case in the country on how law enforcers could leverage crypto to carry out their goals. The law authorizes them to use seized digital or virtual currencies to fund purchases for police equipment, intelligence operations, officer training, and modernization programs.
However, a judge must first approve the use of crypto for such instances. Interestingly, the law grants the judiciary the discretion to allow law enforcement agencies to provisionally use seized crypto even before the final conviction of individuals or groups tied to the confiscated assets.
Additionally, the law paves the way for local law enforcement to enter into international cooperation to enhance their ability to freeze and seize assets, as well as to boost intelligence collaboration.
Expansion of the Judiciary’s Authority over Organized Crime-Linked Crypto Assets
Moreover, the new law expands a judge’s powers to freeze or seize a suspect’s crypto assets during investigations. The restrictions include access to wallets and the online platforms associated with them, to close potential legal loopholes.
If convicted, perpetrators of illegal activities could permanently lose access to their crypto assets in favor of the government. Meanwhile, using privacy tools to conceal criminal activity can be considered an aggravating factor in a judge’s sentencing.
Postponement of Crypto Tax Reform Discussions
Amid da Silva’s signing of the new law, his finance minister, Dario Duringan, announced the postponement of discussions on the country’s proposed crypto tax overhaul. The move was reportedly intended to delay the potential impact of the shift in public sentiment over the matter as the October 2026 presidential elections loom.
To date, Brazil ranks fifth on Chainalysis’ 2025 Global Crypto Adoption Index Top 20, indicating the country’s massive crypto usage. Hence, such a drastic regulatory shift could potentially affect the support of its local crypto community.
