Comissão de Valores Mobiliários (CVM), or the Brazilian Securities and Exchange Commission, has issued a circular prohibiting local investment funds from buying digital currencies, Reuters reported.
According to the CVM, cryptocurrencies cannot be considered as financial assets and banned domestic funds from making investments in them.
“The interpretation of this technical division is that cryptocurrencies cannot be qualified financial assets … and for this reason this their direct acquisition by investment funds … is not permitted,” the CVM said in a circular (as translated by The Financial Times).
It further said that domestic funds that are interested in indirect investment in cryptocurrencies should await further clarification from the CVM.
The regulator in November issued a guidance on Initial Coin Offerings (ICOs), saying that “certain ICO transactions may be characterized as transactions with securities already subject to specific legislation and regulations, and must conform to the applicable rules.”
“The CVM clarifies that securities offered through ICO cannot be legally traded on specific virtual currency trading platforms ( virtual currency exchanges ), since these are not authorized by the CVM to provide securities trading environments the Brazilian territory,” it said.
Last month, the CVM and the country’s central bank published a joint statement highlighting the risks associated with cryptocurrencies.
