Initial Coin Offerings in Brazil – CVM Issues Guidance
In the note, CVM states that it is “alert about recent technology innovations in the global and Brazilian financial markets” and that it is “looking to understand the benefits and risks associated”.
Among other things CVM stated that:
- the offering of virtual assets “depending on their economic context of their issuing” may amount to securities subject to the protections afforded by article 2 of Law 6,385/1976;
- certain transactions may fall within the existing laws and regulations and must be, therefore, subject to the applicable rules;
- the issuing of virtual assets that fall within the definition of “security” (“valor mobiliário”) that do not comply with the rules will be deemed as illicit and subject to the applicable sanctions and penalties;
- securities issued via ICOs cannot be lawfully transacted on virtual currency exchanges as these are not authorised by CVM to operate in Brazil;
- until the note was issued, there had been no registration of any ICOs registered or whose registration had been waived; and
- CVM will continue to monitor ICOs and, if required, it will take the necessary steps within its jurisdiction.
CVM also alerted investors of the various risks involved relating to ICOs, such as fraud and legal risks relating to enforcement of rights against issuers, dealers and other parties.
Contact us if you require further information.
Last modified: November 25, 2017