BRAZIL Law and Practice Contributed by: Fabio Cendão, Heitor Maia, Eduardo Faria and Gabriel Lobato, Faria, Cendão & Maia Advogados (FCM Law)
with identifiable issuers, offerors, managers or inter- mediaries, especially where there is potential classifi- cation as a security or collective investment contract. In truly decentralised structures, the main difficulty remains identifying responsible persons, points of control and legal duties attributable to developers, interface operators, governance participants, liquid- ity providers or other relevant agents. In practice, liability tends to depend less on the for- mal classification of the protocol as “DeFi” and more on the concrete analysis of who exercised control, promoted the offering, managed risks, maintained the relationship with users or economically benefit- ed from the structure. For this reason, eventual dis- putes involving harm in DeFi are likely to be examined through a combination of general rules on civil liability, consumer protection, capital markets, anti-fraud rules and, where applicable, VASP regulation. In Brazil, crypto-assets may be used in certain pay- ment structures, although they do not have legal ten- der status and are not equivalent to the national cur- rency. Their use is possible in private arrangements, provided that the rules applicable to the nature of the transaction, the economic function performed by the asset and the agents involved in the transactional chain are observed. In practice, many crypto-asset payment models are structured through integration with traditional payment arrangements, including cards linked to schemes, issuers, acquirers and other participants in the acceptance and settlement chain. In these cases, the crypto-asset or stablecoin usually functions as the economic source of the funds or conversion asset, while the merchant normally receives fiat currency through the conventional rails of the payment system. The regulatory analysis must start from the structure actually adopted, and not from the generic notion of “payment in crypto”. In the specific case of crypto cards, BCB Resolution No 521 recognises the transfer of virtual assets for the fulfilment of obligations arising 6. Payments and Stablecoins 6.1 Payments
from the international use of a card or other electronic means of payment, bringing these transactions into the foreign exchange market where cross-border ele- ments are present. Where there is custody, conversion, transfer, inter- mediation, settlement, cross-border payment or par- ticipation of VASPs, Central Bank rules may apply, together with AML/CFT, traceability, transparency, operational governance and user protection obliga- tions. Payments with crypto-assets are therefore not prohibited, but their regulatory structuring depends on the function performed by the asset, the participants involved and the rails used for settlement. 6.2 Stablecoins 6.2.1 Fiat Currency and Algorithmic Stablecoins Backed Stablecoins and Algorithmic Models Brazilian regulation has begun to draw a relevant distinction between stablecoins backed by reserve assets and algorithmic stabilisation models. BCB Resolution No 520 defines the fiat-referenced virtu- al asset, or stablecoin, as a virtual asset backed by reserve assets and created for the purpose of main- taining its value linked to the value of a reference fiat currency. This definition favours models with identifi- able and verifiable backing, composed of fiat currency or government bonds issued by the same government that issues the reference currency. For purposes of the Central Bank regime, this regu- latory framework excludes purely algorithmic stable- coins that seek to preserve a peg without correspond- ing reserve assets. In addition, BCB Resolution No 520 prohibits VASPs operating in Brazil from offer- ing, directly or in their trading environments, fiat-ref- erenced virtual assets whose reserve asset control mechanisms are carried out by algorithms. In practice, the Brazilian regime favours stablecoins with traditional, auditable backing subject to reserve controls, rather than algorithmic stabilisation models. The regulatory distinction lies not only in the label of the asset, but in the existence, composition and form of control of the reserve assets that support the peg to fiat currency.
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