Brazil’s Strategic Bitcoin Reserve: A New Frontier in Sovereign Asset Management

Main Points:

• Brazil will hold its first official hearing on August 20, 2025, to discuss Bill 4501/2024, proposing up to 5% allocation of foreign exchange reserves to Bitcoin.
• The proposed Sovereign Strategic Bitcoin Reserve (“RESBiT”) could amount to roughly $17.2 billion, positioning Brazil alongside the U.S. and China in governmental crypto holdings.
• Experts, including representatives from the Central Bank and fintech sector, will debate risks—volatility, regulatory—and benefits—diversification, geopolitical hedge.
  
• The reserve aims to protect against currency fluctuations, geopolitical shocks, and to back the upcoming digital real (“Drex”) CBDC.
• Semi-annual transparency reports and cold-storage security protocols are mandated, mirroring best practices from pioneering nations.
• Global trend: several countries and U.S. states are exploring or formalizing Bitcoin reserves, reflecting a shift toward digital-asset inclusion in official portfolios.
  

1. Context and Background

In November 2024, Federal Deputy Eros Biondini introduced Bill 4501/2024 to Brazil’s Chamber of Deputies, proposing the creation of a Sovereign Strategic Bitcoin Reserve (“RESBiT”). Under the bill, up to 5% of Brazil’s foreign exchange reserves—approximately $343.95 billion as of mid-2025—would be gradually allocated to Bitcoin and other deemed-safe cryptocurrencies. The initiative follows growing global interest in digital assets as sovereign hedging tools, with the United States already holding substantial Bitcoin reserves and other nations, including Bhutan and El Salvador, adopting smaller allocations.

2. The August 20 Hearing: Stakeholders and Agenda

On August 20, 2025, the Economic Development Committee will convene the first official public hearing on RESBiT. Confirmed participants include:

• Central Bank of Brazil representatives
• Ministry of Finance officials
• Crypto advocacy associations and fintech experts (e.g., Diego Kolling of Méliuz)
• General public and academic experts

The agenda encompasses an examination of Bill 4501/2024’s technical, legal, and economic merits, with open floor discussions on risk management, security protocols, and implementation timelines.

3. Proposed Structure of RESBiT

3.1. Asset Allocation

• Up to 5% of total FX reserves in Bitcoin
• Remaining 95% maintained in traditional reserves (USD, gold, sovereign debt)

Insert Figure 1 here (Allocation of Brazil’s Foreign Exchange Reserves)

3.2. Governance and Security

• Custodian bodies: Central Bank and Ministry of Finance as co-administrators
• Cold-storage mandatory, with multi-signature wallets and air-gapped storage
• Semi-annual audited reports to Congress, ensuring transparency

4. Strategic Rationale

4.1. Diversification & Hedging
Bitcoin’s decentralized nature and limited supply can hedge against currency devaluation and inflationary pressures. Geographic diversification of reserve assets may insulate Brazil from U.S. dollar fluctuations and geopolitical risks.

4.2. Digital Transformation
Backing the forthcoming digital real (Drex) with Bitcoin reserves could foster public confidence and technological integration, accelerating CBDC adoption and blockchain innovation in Brazil.

5. Global Comparisons and Trends

As of mid-2025, several nations and sub-national jurisdictions are exploring or formalizing digital-asset reserves:

• United States: Largest governmental holder, with substantial BTC on balance sheet
• China: Reported holdings via state-controlled entities, estimated at $50 billion.
• El Salvador: Official Bitcoin adoption since 2021, with reserves around $350 million.
• Bhutan: Small pilot allocation (<$10 million) for technology research.

Insert Figure 2 here (Comparison of National Bitcoin Reserve Holders)

6. Risks and Counterarguments

• Volatility: Bitcoin’s price swings could introduce reserve valuation volatility.
• Regulatory Uncertainty: Global regulatory frameworks for crypto remain in flux, posing compliance challenges.
• Liquidity Concerns: Converting large BTC holdings into fiat during crises could impact markets.

Proponents argue that these risks can be mitigated through phased purchases, robust risk management frameworks, and limited allocation caps.

7. Next Steps Toward Enactment

1. House Approval: Post-hearing, the bill returns to the full chamber for vote.
2. Senate Deliberation: A parallel review in the Senate, with possible amendments.
3. Presidential Assent: Final signature by President Lula, followed by regulatory rule-making.
4. Implementation Phases: Gradual acquisition strategy, beginning Q1 2026.

Conclusion

Brazil’s upcoming hearing on establishing a Sovereign Strategic Bitcoin Reserve marks a watershed moment in the convergence of national finance and digital-asset innovation. By potentially allocating $17.2 billion (5% of FX reserves) to Bitcoin, Brazil could cement its role as a leader in sovereign crypto adoption. While volatility and regulatory hurdles remain, the structured, transparent framework proposed under Bill 4501/2024—combined with global momentum—positions Brazil at the forefront of a new era in strategic asset management.