Brazil’s investment fund regulator dubbed Comissão de Valores Mobiliários (CVM) has allegedly legalized investment funds to invest their money into the cryptosphere through acquiring the share of funds and derivatives.
Investors with a portfolio of digital assets such as Bitcoin, Litecoin, and Ethereum could purchase a share in the foreign funds. The funds would take a commission to operate the transaction just like a stock fund.
Brazil Proceeds with prudence
According to a report conducted officially by the Finance Ministry of Brazil (FMB), the news was first covered by a local media outlet called Portal do Bitcoin which addressed; funds will also be able to invest in assets traded in other jurisdictions as far the regulation in the market permits its trading.
The document issued by the Ministry of Finance reveals that there’s a scope for illegal activities such as money laundering. Therefore, these funds should be poured into the digital assets through a regulated exchange. The report adds the investment should be made in the administration of regulatory agencies that can control such illicit practices. Nonetheless, there’s no restriction on making investments in another way as far the regulatory and legal necessities are met.
Subsequently, the circular further claims that funds must take safety measures before buying a specific cryptocurrency to stay away from purchasing digital tokens issued by fake Initial Coin offerings (ICOs).
Moreover, the report points at six safety measures including checking the trading liquidity of a cryptocurrency, verifying the liquidity of a token and identifying the technology whether it is accessible, transparent, and identifiable by a user. In addition, the funds should ensure whether the software is open source and free.
Surprisingly, it also addresses that investments must verify the management of hostile sales method or check whether the arrangements bring divergence of interest and concentration of additional commands on the promoter or issuer of the digital asset.
That all being said, Brazilian regulatory agency raised a point of concern regarding the right pricing of each crypto asset, the document of Brazilian Finance Ministry reads:
“One possible parameter, in this sense, is the investment in crypto assets that contain the permanent disclosure of globally recognized price indices prepared by independent third parties.”
In the previous research conducted by the finance ministry, Daniel Maeda the chief of institutional investor relations at CVM stated, investment funds don’t have the authority to put the money in digital assets directly. According to CVM, investments funds that invest in cryptosphere will have to first clear that how they will move towards airdrops and hard forks.
Brazil has been continuously supporting the crypto industry, and it has come up with some impressive figures regarding market growth. The market of Brazil grew nearly from nothing to worth more than 2.5 billion USD last year.
Consequently, many crypto enthusiasts are considering this move as a significant step towards the worldwide acceptance of cryptocurrencies.
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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Global Coin Report and/or its affiliates, employees, writers, and subcontractors are cryptocurrency investors and from time to time may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency and read our full disclaimer.
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