BRAZIL Law and Practice Contributed by: Fabio Cendão, Heitor Maia, Eduardo Faria and Gabriel Lobato, Faria, Cendão & Maia Advogados (FCM Law)
nant focus has been on solutions relating to foreign exchange, payments and capital markets, rather than blockchain as an autonomous regulatory object. 1.1.3 Regulation of Blockchain Technology The Brazilian regulatory approach to blockchain varies according to the regulator and the use case. Within the BCB, the emphasis is on risk mitigation: the new regulatory framework applicable to VASPs establishes requirements relating to governance, asset segrega- tion, operational controls, compliance and transaction reporting. This approach seeks to preserve financial system stability and reduce prudential, operational and integrity risks, without adopting an unrestricted openness to innovation. Within the CVM, the approach has been to apply the existing regulatory framework to instruments that begin to use blockchain as a technological lay- er. Asset tokenisation, for example, does not auto- matically change the legal nature of the underlying asset: a tokenised debenture continues to be treated as a debenture. For this reason, the CVM has acted through guidance, opinions and circular letters, with- out creating, to date, a parallel regulatory framework solely for tokenised assets. There is no specific regulation in Brazil for the use of blockchain technology itself. The technology is treat- ed as neutral infrastructure, subject to the rules of the sector in which it is applied. This means that regu- lated companies that outsource or integrate block- chain-based solutions remain subject to the general rules on technology contracting, information security, operational continuity, data protection and third-party governance. Outside the financial system, the use of blockchain in supply chains, public records and document authen- tication has advanced through sector-specific and state-level initiatives, still without a dedicated federal framework. This absence of uniform regulation may create regulatory asymmetries across sectors and legal uncertainty for projects that combine different activities, such as technology, data, payments, digital assets and registries.
The application of the Brazilian General Data Pro- tection Law (LGPD) to blockchain-based systems remains a sensitive issue in Brazil, particularly because of the tension between the immutability of on-chain records and data subject rights, such as rectification, erasure and objection to the processing of personal data. Public blockchains tend to be poorly suited to the deletion or alteration of personal data recorded directly on the network, which requires regulatory and technological design solutions from the outset of the project. In practice, projects using blockchain should avoid placing personal data directly on-chain whenever possible. Solutions such as off-chain storage with on- chain references, anonymisation or pseudonymisation techniques, zero-knowledge proofs, access controls and data minimisation may reduce risks of incompat- ibility with the LGPD. The Brazilian Data Protection Authority (ANPD) has not yet issued specific guidance on blockchain, which maintains a relevant degree of legal uncertainty for projects that process personal data in distributed infrastructure. 1.1.4 Smart Contracts Brazil does not yet have specific legislation on smart contracts, but the existing contractual framework allows their validity to be recognised provided that the general requirements applicable to contracts are met. In practical terms, this means that the parties must have capacity, the object must be lawful, pos- sible and determined or determinable, and the form adopted must not be prohibited by law. Brazilian law also recognises the validity of electron- ic documents and signatures, which reinforces the admissibility of contractual instruments entered into, stored or performed by digital means. In addition, the Economic Freedom Law reinforces private autonomy and the freedom of the parties to structure legal trans- actions through atypical or digital formats, favouring the use of smart contracts. Even so, the enforceability of a smart contract will depend on the clarity of the underlying legal terms, the possibility of identifying the parties, the alignment between the code and the contractual intent, and the existence of appropriate mechanisms to deal with
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