Brazilian Securities Commission CVM Opens a Path for Funds to Invest in Crypto

The Brazilian Securities Commission CVM has cleared the path for funds to dive into cryptocurrency-based investments. The institution issued a new set of rules that allows financial investment funds to invest in cryptocurrency tokens with the equivalent protections offered to other investment assets such as stocks and bonds, opening new markets for these companies.

Brazil has given one more step for the regularization and adoption of cryptocurrencies as investment instruments. The Brazilian Securities Commission has approved a new set of rules that now allow established funds to invest in cryptocurrency, opening a new market for these institutions.

The norms, which were passed after President Jair Bolsonaro sanctioned a cryptocurrency law last week, regulate crypto investments in a way in which these companies will be able to enjoy the same protections available for other investment assets such as stocks and bonds.

The approved framework explicitly requires that operations with cryptocurrency must be conducted on exchanges approved by the Central Bank of Brazil or by the CVM in the country. If these are made offshore, the investments will have to be overseen by a local supervisor.

In any way, these institutions “will have legal competence to supervise and inspect the operations carried out, including with regard to curbing abusive practices in the market, as well as money laundering and financing of terrorism and proliferation of weapons of mass destruction.”

However, not every asset will be allowed to enter the portfolio of these funds, as these will have to fall into the categories outlined in the newly approved crypto law.

The issuance of this new framework just days after the sanction of the cryptocurrency law in the country shows that institutions in Brazil are eager to regularize the status of these assets in several areas. The Brazilian Securities Commission itself executed a pivot, having denied the opportunity for funds to invest in cryptocurrencies back in 2018.

However, the commission changed this law months later to allow funds to invest in crypto offshore, although indirectly. Brazil has shown a significant level of adoption of crypto both by citizens and companies. According to numbers presented by the Brazilian tax authority (RFB), almost 42,000 companies purchased cryptocurrency during October, breaking purchasing records.

The same purchasing record, but for individuals, was broken during September when almost 1.5 million people purchased crypto. Due to this popularity, several traditional and digital institutions have started or will be offering cryptocurrency services in the country, including Nubank, Itau, and Santander, and even a digital version of the real, the fiat currency of Brazil, is also in the works.

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