Brazil’s Securities Watchdog Agency (CVM) Approves Investment Funds to Hold Crypto Assets
CVM’s announcement on December 23 confirmed removing the hindrances that prohibited investment funds from holding cryptos. CVM’s statement revealed that the securities reconsidered its restrictive stance that banned investment funds from operating within the crypto segment.
Investment Funds Free to Hold Crypto Assets
CVM added that funds could operate within the crypto segment provided they comply with the existing controls involving the virtual assets’ integrity and ownership. Including crypto assets in the fund portfolios mandated compliance with the new regulatory framework outlined in the law, assented to by the outgoing president Bolsonaro on December 22.
The law exclusively considers the crypto assets constituting the investment fund portfolio to ensure they are tradeable within the entities approved by CVM and the country’s central bank. In addition, CVM approved the inclusion of virtual assets whose operations are approved by the local supervisor despite being foreign operations.
Impact of Presidential Assent to Crypto Bill
Days before exiting the executive office, president Bolsonaro assented to the crypto bill as approved by the Chambers of Deputies. The provisions of the law, scheduled to become effective in 6 months, now recognize the existence of virtual assets fraud. Besides legalizing cryptos as alternative payment, the new law establishes licensure requirements for virtual service providers.
While the law fails to consider cryptos as legal tenders, it orients the South American country closer to the mass adoption of virtual currencies.
The signing of the crypto bill into law by the outgoing president Bolsonaro, ten days before his tenure ends on December 31, offers a much-needed reprieve to virtual assets advocates. The virtual assets community has questioned the deficient oversight amidst the calamitous FTX collapse.
New Crypto Law Seals Loopholes
The crypto bill journey traces to its approval by the Senate. Its support prompted the introduction of the crypto bill in the lower chamber, where it sat dormant. The dormancy arose from the ongoing election. Nonetheless, it regained urgency following the sudden FTX implosion.
The lawmakers considered that the existing regulations applied unevenly to some crypto players. In particular, several powerful actors implemented the discretion of their executives even where such contravened Brazilian laws.
Consequently, the presidential assent to the bill is poised to create a favorable context for crypto utilization. The approval on Thursday is conceived to trigger mass crypto adoption within retail, online transactions, and car dealership segments.
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