Brazilian Securities and Exchange Commission CVM Subpoenas Mercado Bitcoin on Fixed Income Token Investments

The Brazilian Securities and Exchange Commission (CVM) has sent a subpoena to Mercado Bitcoin, one of the biggest exchanges in the country, to inquire about the services the company lends regarding cryptocurrency-related fixed return investments. The company will have to disclose the details of these investments and if they plan to maintain them as available to the general public.

Cryptocurrency exchanges are becoming more than just that, and in regions like Latam, where there are countries with high inflation numbers, some offer bank-like products to entice customers to enter the crypto market. Mercado Bitcoin, one of the biggest cryptocurrency exchanges in Brazil, has been subpoenaed by the Brazilian Securities and Exchange Commission (CVM) on the services that it offers customers via its platform.

The subpoena inquires about the services offered via the Tokens section on the web page of Mercado Bitcoin, which, according to the CVM, offers a way for customers to diversify their portfolio with supposed low risk and receive a high yield in different areas.

These tokens are available for customers with more than a certain number of stablecoins, ostensibly providing a higher yield than normal savings products in the short term.

The CVM is requiring certain key information about how these tokens work. Mercado Bitcoin will have to detail the number and identities of the customers that have invested in these products since January 2020. In addition, Mercado Bitcoin will have to announce if it intends to keep offering these token products in the future. If it does, the company might face sanctions if the CVM decides that the products are irregular.

However, Mercado Bitcoin affirms it is not offering irregular services. In a statement, the company explained:

We do not carry out a public offering of securities outside the scope of the authorizations we have as an authorized crowdfunding and investment manager platform.

In the same way, the company clarified that they take the utmost care to not infringe the field of action of authorized entities, and that the company had consulted about the structure of these tokens before offering the products in 2020.

This is just the latest problem that the exchange has faced this year, with the company executing two different layoff rounds, the first in June and the last one executed earlier this month. In 2021 Mercado Bitcoin raised $200 million in its Series B funding round, backed by Softbank, achieving a valuation of more than $2 billion.

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