The Brazilian Securities Commission is now offering funds the chance to make investments in cryptocurrencies.
The CVM recently issued a new set of rules that would provide financial investment funds a way of investing in crypto tokens and they would be able to enjoy the same investment protections available with other assets, such as bonds and stocks.
This would offer these companies a new market to explore.
Crypto investment for funds
It appears that Brazil has taken one more step towards the adoption and regulation of crypto as an investment asset.
A new set of rules have now been approved by the Brazilian Securities Commission (CVM) that will offer established funds the opportunity of investing in crypto, which would give these institutions access to a new market.
These norms were approved despite the fact that a crypto law was sanctioned by President Jair Bolsonaro last week.
But, these rules would ensure regulation of crypto investments to ensure that the companies are able to benefit from the same protections that are given with investments in other assets like bonds and stocks.
The framework that was approved clearly requires that all crypto-related operations should only be conducted on exchanges that have been approved by the CVM, or the Central Bank of Brazil in the country.
If the investments are made offshore, then a local supervisor would have to oversee them. This would provide these institutions with legal competence for inspecting and supervising the operations that are carried out.
It would also help curb any abuse practices and reduce the risk of terrorism financing, money laundering, and weapons proliferation.
But, it should be noted that these funds are not allowed to add any asset to their portfolio, as different categories would be outlined in the crypto law that has been newly approved.
Evolving adoption and regulation
The fact that this new framework was issued only days after a crypto law was sanctioned in Brazil shows that institutions in the country are eager to regulate crypto.
Back in 2018, it was the Brazilian Securities Commission that had denied funds the opportunity of investing in crypto, but it has now changed its stance.
The commission had changed this law only a few months later and had given funds the opportunity to invest in crypto offshore, but not directly.
Crypto adoption in Brazil has been quick by both companies and citizens. The Brazilian tax authority (RFB) disclosed numbers showing that crypto was bought by almost 42,000 companies in October.
This was the highest purchasing record in the country. The same record for individuals had also been broken back in September when almost 1.5 million people made crypto purchases.
Thanks to the popularity of crypto in the country, a number of digital and traditional institutions have already or will begin offering crypto services in Brazil.
These include some prominent names like Santander, Itau, and Nubank and the country is also working on the development of its central bank digital currency (CBDC) called the digital real.