The Securities and Exchange Commission (CVM) has regulated investment funds in Brazil, which will now be able to invest in bitcoin and cryptocurrencies. The news was awaited by the financial market and should make the sector more efficient, according to CVM President João Pedro Nascimento. The news presented this Friday (23) comes through CVM Resolution No. 175/2022. Before, investment funds had many more rules to follow, but 38 rules ended up being cut by the CVM with the new instruction.
CVM president explains new rules for investment funds, which can even invest in bitcoin and cryptocurrencies directly
CVM Resolution No. 175 initially has a general part, applicable to all investment funds. In addition, it has specific rules for financial investment funds (FIF) and receivables investment funds (FIDC). Launched this Friday, the new norm shook the Brazilian financial market, which was waiting for instructions from the sector. For the CVM, the result is the result of an enormous advance in the efficiency of market funds. According to the CVM president, the new rule comes down to innovation and modernization for investment funds.
“Innovation and modernization. The new rule for Investment Funds portrays the relevance of a solid and functional regulatory environment for this very important industry in the Brazilian Capital Market. We follow an innovative methodology in which we adopt General Standards applicable to all Investment Funds , which are complemented by specific rules contained in each of the annexes, which regulate the different categories of existing investment funds. At this first moment, the rule is being complemented by the annexes of the FIF and FIDC, with the convenience and flexibility of later complementation by other categories of funds. Thus, CVM Resolution 175 can be improved, whenever necessary, through the annexes that will follow. In addition, a single and objective framework facilitates understanding and contributes to reducing the so-called cost of regulatory compliance . Less costs, more opportunities.”
And in Normative Annex I of the Resolution, which deals with the so-called FIF (Shares, Foreign Exchange, Multimarket and Fixed Income), the market followed several innovations. Among them, the CVM presented investment possibilities in commonly called “environmental assets” and in cryptoactive🇧🇷 According to Superintendent of Supervision of Institutional Investors, Daniel Maeda, FIF funds can invest in bitcoin and cryptocurrencies, for example.
“With regard to FIF, we can highlight the possibility that, once certain requirements are met, funds intended for the general public may invest up to the entirety of their equity in financial assets abroad.”
The CVM Director, Alexandre Rangel, also highlighted that the norm that was born this Friday is modern and in line with international jurisdictions.
Rules for Bitcoin and Cryptocurrencies
In practice, the FIF Investment Funds can invest up to 10% of their net worth in bitcoin and other cryptocurrencies🇧🇷 The resolution understands that cryptoasset is an asset digitally represented, and must have at least the characteristics of: a) its existence, integrity and ownership are protected by cryptography; and b) your transactions are executed and stored using distributed ledger technology🇧🇷 In addition, bitcoins traded by Investment Funds must take place in entities authorized by the Central Bank of Brazil or CVM. Finally, in case the investment occurs in platforms abroad, the company must have regulation and inspection to prohibit abusive market practices, money laundering and financing of terrorism and proliferation of weapons of mass destruction.
ANBIMA scheduled an event to address the new CVM resolution
On January 12, ANBIMA (Brazilian Association of Financial and Capital Market Entities) and CVM (Securities and Exchange Commission) hold an event to detail and discuss CVM Resolution 175. Published this Friday, the standard modernizes the regulatory framework of investment funds and brings important advances to the industry. Among the confirmed speakers are João Pedro Nascimento, president of CVM, and Carlos André, president of ANBIMA, in addition to the autarchy team and ANBIMA representatives. The event “Fala, CVM: new regulation of funds” will have a hybrid format. The face-to-face modality will bring together entities associated with ANBIMA at Teatro Renaissance, in São Paulo, with the right to networking space before the start of the discussions. There will also be a live broadcast from 10 am on ANBIMA’s social media profiles (YouTube, LinkedIn, Facebook and Twitter).
