BRAZILIAN SECURITIES AND EXCHANGE COMISSION PROHIBITS DIRECT ACQUISITION OF CRYPTOCURRENCY BY LOCAL INVESTMENT FUNDS

In view of the intense repercussion of digital economy and new financial technologies on the securities market, on January 12, 2018, the Investor’s Relations Superintendence of the Brazilian Securities and Exchange Commission“CVM”) issued Circular Letter No. 1/2018 establishing that Cryptocurrencies are not financial assets, as they do not qualify under the definition of article 2, V of CVM Instruction 555/2014 and, therefore, cryptocurrencies may not be acquired by investment funds regulated by such Instruction.
In addition, CVM clarified that it is still evaluating the possibility of Brazilian funds making indirect investments in cryptocurrency, that is, acquisition of derivatives and/or investments in other vehicles that hold cryptocurrency in their portfolios, incorporated in jurisdictions where investments in cryptocurrency is admitted.
Thus, CVM recommends that managers of investment funds await until CVM takes a decision on the matter before acquiring assets that have exposure to Bitcoin, Ethereum, Ripple, Litecoin, Monero and similar.
Candido Martins Advogados is following the developments on this subject and is available for any clarification.