BRAZIL Law and Practice Contributed by: Eduardo Castro, Pedro Nasi and Gabriel Libanori, Machado, Meyer, Sendacz e Opice
models by providing ancillary services to regulated players, entering into partnerships with regulated fintechs or exploring licence exemptions under the regulations. 2.2 Regulatory Regime Despite the absence of a formal or unified taxonomy, fintechs may be broadly categorised as licensed or unlicensed institutions. Licensed fintechs can be fur - ther divided into credit or payment fintechs. Naturally, fintech solutions and/or innovative business models may be implemented by incumbent or traditional financial institutions as well. Traditional Financial Institutions Traditional financial institutions in Brazil include: • commercial banks, which among other activities carry out traditional financial intermediation by rais - ing funds from the public and lending such funds to entities and individuals; • investment banks, which may, among other activi - ties, also carry out financial intermediation but are not allowed to receive demand deposits; • universal banks operate two or more portfolios (one of which must be either a commercial or investment portfolio), combining different bank- related services; • credit, finance and investment companies ( socie- dades de crédito, financiamento e investimento ), the primarily activity of which is to extend credit, especially to segments and consumers that are not fully covered by commercial banks; and • broker-dealers, which primarily carry out security intermediation and underwriting activities, and may not extend credit (except for margin loans). Credit Fintechs The various types of credit fintechs are as follows: • direct lending companies ( sociedades de crédito direto SCDs), have as their primary activity credit lending via electronic platforms using their own funds; and • peer-to-peer (P2P) lending companies ( sociedades de empréstimo entre pessoas SEPs), which facili - tate P2P lending via electronic platforms without
incurring the credit risk arising in connection there - with. Payment Fintechs The various types of payment fintechs are as follows: • electronic currency issuers ( emissores de moeda eletrônica EMEs) are payment institutions that con - vert cash into digital currency and vice versa, issu - ing pre-paid payment instruments to their clients; • post-paid instrument issuers are payment institu - tions that manage post-paid payment accounts of end users and enable payment transactions based on those accounts; • acquirers are payment institutions that enable mer - chants to accept payment instruments and partici - pate in the settlement of transactions as creditors of issuers; and • payment initiation service providers (PISPs) are payment institutions that do not hold funds or manage payment accounts but enable end users to initiate payment transactions from one account to another. Virtual Asset Service Providers There are three types of VASPs in Brazil according to applicable regulations: • virtual asset intermediaries ( intermediária de ativos virtuais ), whose primary corporate purpose is the intermediation of virtual assets, encompassing, among other activities, the underwriting, buying and selling of virtual assets, management of port - folios and exchange of virtual assets; • virtual asset custodians ( custodiante de ativos vir- tuais ), whose corporate purpose is to take custody of virtual assets, and whose activities include the safekeeping and control of instruments that affect the exercise of rights and benefits in relation to virtual assets, the supervision of buy or sell orders for virtual assets, etc; and • virtual asset brokers, whose corporate purpose is intermediation and custody of virtual assets. It should be noted that VASPs that were already oper - ating in Brazil before 2 February 2026 are authorised to maintain their activities in the country, provided that they comply with the transitional regime set forth
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