Brazil Investment Funds Given Green Light To Invest In Cryptocurrency Ecosystem
Brazil is the latest country to echo support for cryptocurrency focused investments. The country’s securities regulator says it won’t stand in the way of investment funds, looking to invest in the ecosystem.
What this means is that the funds can invest portfolio consisting of the like soft Bitcoin, Ethereum Litecoin among others. The go-ahead comes as a surprise given that the agency had previously barred funds from investing directly in cryptocurrencies.
Interested funds can now invest in cryptocurrencies through the acquisition of derivatives or by investing in foreign funds. However, when it comes to foreign cryptocurrency investments, the investment funds must ensure such products are legit and regulated by the host country.
"Instruction 555, when dealing with overseas investment, does not prohibit indirect investment in crypto active. However, it is incumbent upon the managers, managers and independent auditors to observe certain steps in the acquisition and maintenance of these assets in the portfolio,” said Superintendence of the Securities and Exchange Commission superintendent Daniel Maeda.
The minister of Finance has also issued a stern warning, urging the Investment Funds to be extremely cautious. The funds must uphold all standards to stay clear fraudulent investment schemes as well as avoid money laundering among other illicit activities. The Ministry has also asked regulatory agencies to scrutinize such funds to ensure they don’t misuse the cryptocurrency investment leeway.
Funds must also stay clear of tokens issued by fraudulent ICOs as part of the new regulations. The warning comes at a time of growing concerns about ICOs. A good number of ICO projects carried out last year have already collapsed and closed shop with investors’ money.
In a bid to ensure that Investment funds stay clear of fraudulent ICOs, the regulator has stipulated six precautions. The funds must at all-time verify whether the technology or product on offer is transparent and accessible by end users. The funds must also ascertain whether the token on offer in the ICO has sufficient liquidity.
In addition, investment funds eyeing opportunities on ICO must maintain a watchful eye on conflicts of interest. In this case, they must ensure that there is no excessive power concentration of power on the issuer of a crypto asset in an ICO. The investment funds will also have to stipulate how they intend to approach hardfork as well as airdrops.
Brazil is one of the few countries in the world that continues to warm up to the cryptocurrencies spectacle. The government has already launched investigations on claims banks are purposely hurting cryptocurrency exchanges operations.