Brazil allows investment funds to invest in cryptocurrencies, details inside

  • The Brazilian Securities and Exchange Commission (CVM) has approved the ability of investment funds to hold crypto assets.
  • Crypto assets can be included in a fund if they are traded in entities licensed by local or global authorities.

The Brazilian Securities and Exchange Commission (CVM) approved the ability of investment funds to hold crypto assets yesterday (December 23). The decision, according to the regulator, allows funds to operate in the crypto sector while paying attention to controls around the safety and ownership of assets.

According to CVM, crypto assets must meet a set of criteria established by a new regulatory framework enshrined in a law passed by outgoing Brazilian President Jair Bolsonaro in order to be included in fund portfolios.

CVM recently released a new regulatory framework for mutual funds. The regulator explained in a note that the decision aims to allow funds to operate in this new market segment while maintaining control over the existence, integrity and ownership of the assets.

Crypto assets must meet a set of criteria to be included in a wallet, which is in line with the regulatory framework for the sector approved by President Bolsonaro yesterday.

Brazilian authorities are implementing AML/CFT guidelines

Crypto assets can be included in a fund if they are traded in entities authorized by the Central Bank of Brazil or CVM, or by a local regulatory authority when operating in another country.

These bodies must be legally competent to supervise and inspect the operations carried out, including the implementation of Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) guidelines.

In October, CVM issued a market advisory opinion on the cryptocurrency sector. Although crypto-asset groups are not explicitly listed as securities in the document, market agents must consider the characteristics of each crypto-asset group to determine whether it is a security or not.

According to the opinion, asset markup is not subject to prior approval or registration by CVM. However, token issuers and public token offerings will also be subject to regulation.

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