Brazil Turns Confiscated Crypto Into Law Enforcement Funding Tool

• Brazil now allows seized crypto to fund police equipment, training, and operations.
• Law No. 15.358 allows authorities to freeze, block, and seize crypto linked to criminal activity.
• Use of privacy tools to hide crime now increases sentencing risk under the new framework.

Brazil has passed a new law allowing authorities to use confiscated cryptocurrency to fund public security. President Luiz Inácio Lula da Silva signed Law No. 15.358, authorizing the use of seized crypto for police equipment, training, and operations, even before final conviction, with judicial approval.

Legal Framework Targets Organized Crime

Law No. 15.358 defines any asset used in a crime as part of that crime, even if it was not used exclusively for illegal activity. This expands the scope of confiscation. Crypto held, moved, or linked to criminal networks can now be seized and redirected.

Authorities can also freeze, block, or seize digital assets during investigations. Courts can restrict access to exchanges, wallets, and online platforms. 

Once convicted, individuals lose access to both the traditional financial system and crypto infrastructure.

The law also adds penalties for using encrypted messaging apps or privacy tools to hide criminal activity. This classification raises sentencing risk for offenders who rely on such tools. At the same time, the framework enables international cooperation to track funds and recover assets across borders.

National Database and Enforcement Push

A national criminal database will be created under the law to track the financial structures of organized crime groups operating in Brazil. The goal is to improve coordination between agencies and speed up investigations.

The move comes after large-scale cases like Operation Lusocoin, where authorities tracked billions of reais moving through shell firms, OTC brokers, and non-custodial wallets.

Brazil chose not to direct seized crypto into a national reserve. A separate proposal to build a Bitcoin reserve remains under review.

Lawmakers have discussed allowing purchases of up to 1 million Bitcoin, but the bill remains uncertain. For now, the government is prioritizing enforcement over accumulation.

It is important to note that the law arrives as Brazil delays changes to crypto tax rules until after the October presidential election. Officials aim to avoid policy shifts that could disrupt markets ahead of the vote.

With over 213 million people and strong crypto usage, the law gives authorities a direct tool to target financial flows tied to organized crime.

Related: Bitcoin Price Under Pressure as Brazil Tightens Crypto Rules