Brazilian Securities and Exchange Commission Bans Investment Funds from Crypto
During the last few months, many of the top digital currencies by trading volume seemed mostly unaffected by the regulatory changes being implemented by government throughout the world. However, the period of resistance now seems to be over, given the fact that most of the big cryptocurrencies have fallen in value.
However, regulatory efforts continue. Recent reports indicate that the Brazilian Securities and Exchange Commission has decided to forbid local investment funds from purchasing digital currencies.
According to the commission (CVM), digital currencies are not considered financial assets, therefore domestic funds which make crypto investments are not allowed to do so. In the circular released by the CVM, it was mentioned that: “The interpretation of this technical division is that cryptocurrencies cannot be qualified financial assets, and for this reason this their direct acquisition by investment funds is not permitted.”
Additionally, it is important to keep in mind the fact that domestic funds which want to make an indirect investment in crypto assets should avoid doing so, prior to further clarification to be released by the commission.
Back in November, the CVM released a guideline for Initial Coin Offerings, where it was mentioned that some ICO transactions can be regarded as security-based transactions, which are currently regulated by the legislation in Brazil, therefore both investors and ICO holders should follow relevant legislation prior to creating, or investing in a project. The ICO guideline also mentioned that securities being offered by ICO holders cannot be traded on digital currency exchanges, as these have not been authorized by the CVM to carry out security trading in Brazil.
Last but not least, the Brazilian Central Bank has also issued a statement last month, meant to outline some of the main risks associated with digital currency investments.
Other than this legislative effort, there is no other pending project meant to regulate digital currencies in Brazil. Members of the crypto community will hopefully remain unaffected.
Based on everything that has been outlined so far, digital currency investments have been made a bit harder for local investment funds, yet this should not prevent individuals from carrying out their very own transactions, as long as they’re respecting the Brazilian laws.