BRAZIL Law and Practice Contributed by: Fabio Cendão, Heitor Maia, Eduardo Faria and Gabriel Lobato, Faria, Cendão & Maia Advogados (FCM Law)
mits these transactions to regulatory analysis, con- sidering that the identity, financial capacity, reputation and structure of the controllers are relevant elements for maintaining the authorisation. The rule also defines who may exercise direct control over a VASP. Such control may be held by natural persons, institutions authorised by the Central Bank, financial or similar institutions based abroad, or Brazil- ian legal entities whose exclusive corporate purpose is to hold equity interests in institutions authorised by the Central Bank. Investment funds may not act as controllers or form part of the control group of a VASP. The Central Bank may require a shareholders’ or quotaholders’ agreement to clarify the control struc- ture, request additional documents and information, access public or private information and summon controllers for interview. If irregularities are identified, the authority may require the transaction to be regu- larised, including by unwinding the acquisition or dis- posal of the equity interest. 3.4 Passporting International Reach of Brazilian Authorisation An authorisation granted in Brazil enables the insti- tution to operate only within the national regulatory perimeter and does not operate as a passport to other jurisdictions. Accordingly, a Brazilian VASP intending to provide services abroad must assess, on a case- by-case basis, the local rules applicable to VASPs, payment services, foreign exchange, custody, inter- mediation, securities, AML/CFT and consumer pro- tection. Even so, Brazilian authorisation may facilitate access to other markets from a practical and reputational perspective. This is because it demonstrates that the institution has undergone regulatory analysis covering governance, financial capacity, lawful origin of funds, internal controls, administrators, technological struc- ture and prudential requirements. To benefit from this, it will normally be necessary to conduct a separate regulatory process in the destina- tion jurisdiction. This process may involve submitting corporate documents, compliance policies, informa- tion on ultimate beneficial owners, operational struc-
ture, AML/CFT controls and, where applicable, evi- dence of authorisation and supervision in Brazil.
4. Cross-Border Services 4.1 Marketing
In Brazil, the cross-border sale of blockchain and crypto-asset services is not analysed solely on the basis of the place of incorporation or licensing of the foreign entity. The central point is whether there is a material connection with the Brazilian market and whether the activity, by its economic content, enters the local regulatory perimeter. The offering, making available, intermediation, con- tracting or performance of products and services directed at clients resident or domiciled in Brazil may attract the application of Brazilian regulation. This is especially relevant when the activity falls within the Central Bank regime, as the provision of virtual asset services, or within the CVM regime, where it involves securities, derivatives, collective investment contracts or tokenised structures subject to capital markets rules. The absence of physical presence in Brazil does not, in itself, eliminate regulatory risk. Elements such as onboarding of Brazilian clients, commercial chan- nels directed at the country, a website in Portuguese, local advertising, financial flows originating in Brazil or operational infrastructure aimed at the Brazilian mar- ket may indicate an active offering to the local public. Brazilian law does not provide for a general and sys- tematic safe harbour for reverse solicitation. Reverse solicitation may be invoked only as a narrow interpre- tative argument, depending on evidence that the Bra- zilian client approached the foreign entity spontane- ously and independently. This argument tends to lose force where there is targeted advertising, organised solicitation, active offering or structured availability of products to the Brazilian market. Even in reverse solicitation scenarios, the analysis does not automatically exclude other regulatory con- sequences if the contractual, operational or financial structure reveals material involvement in the Brazilian
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