BRAZIL Law and Practice Contributed by: Fabio Cendão, Heitor Maia, Eduardo Faria and Gabriel Lobato, Faria, Cendão & Maia Advogados (FCM Law)
VASP perimeter and require Central Bank authorisa- tion. Even outside this perimeter, transactions carried out without an exchange may trigger reporting obligations to the Brazilian Federal Revenue Service, especially when the monthly volume exceeds the applicable thresholds. Crypto-as-a-service models are also gaining relevance in the Brazilian regulatory agenda. These models are particularly sensitive when regulated institutions, fin- techs or non-crypto platforms begin to offer exposure, trading, custody, staking, payments or other services involving virtual assets through third-party technologi- cal or operational infrastructure. The main regulatory concern is to prevent outsourcing of the technology layer from operating as an improper delegation of a regulated activity or as a “lending” of a licence. For this reason, crypto-as-a-service structures tend to require clear allocation of responsibilities between the licensed entity and the infrastructure provider. Con- trols over KYC/KYT, AML/CFT, custody, asset segre- gation, risk management, cybersecurity, operational continuity, transparency to users and supervision of relevant service providers also become relevant. In relation to stablecoins, Bill No 4,308/2024 is also under discussion and seeks to regulate the issuance of virtual assets referenced to fiat currency by entities located in Brazil. The bill proposes rules on full back- ing, segregation and auditability of reserves, transpar- ency duties, protection of users in issuer insolvency scenarios and the regulatory competence of the Cen- tral Bank, without prejudice to the CVM’s role where the asset has the nature of a security. 2.3 Regulated Firms and Legal Wrappers The use of an investment structure, such as a fund, does not in itself change the regulatory nature of the underlying asset or activity. The main difference is that investors obtain exposure through a regulated vehicle, which brings the analysis within the CVM framework for investment funds, including fiduciary duties, dis- closure, suitability, governance and oversight of ser- vice providers.
Regulated firms and investment funds with exposure to crypto-assets must assess the regulatory conse- quences on a case-by-case basis, considering the form of exposure, the legal nature of the asset, the investment strategy and the target audience. In the case of funds, the CVM allows exposure to crypto-assets within the regulation applicable to investment funds, including under CVM Resolution No 175, provided that the regulations, investment policy and disclosure documents adequately address the risks involved, pricing criteria, service providers, cus- tody, liquidity, suitability and the fiduciary duties of the administrator and manager. Regulated vehicles, such as crypto-asset ETFs, may even have significant or predominant exposure to digi- tal assets, provided they are structured in accordance with CVM rules and with safeguards compatible with the nature of those assets. 2.4 Token Issuance Token Issuance and Disclosure Requirements In Brazil, there is still no broad ICO or TGE market comparable to that seen in other jurisdictions. The viability of an issuance depends primarily on the eco- nomic nature of the token, the rights attributed to its holders and the way in which the offer is structured and distributed to the public. The CVM has clarified, in its statements on ICOs and in CVM/SIN Circular Letter No 1/2018, that offers of tokens that qualify as securities or collec- tive investment contracts are subject to the capital markets regime. In these cases, rules on registration or exemption from registration, distribution, risk dis- closure, supervision and liability before the authority may apply. White papers do not replace prospectuses, offering documents or other regulatory information required by the CVM, although they may be used as complemen- tary informational material. The logic of the Brazilian capital markets is guided by the principle of full and fair disclosure, so that offering documentation must allow the investor to understand, clearly and suffi- ciently, the risks, rights, economic structure and use of proceeds involved.
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