As per local media reports, João Pedro Nascimento, the President of the Securities and Exchange Commission (known in Brazil as the CVM) has briefed about the regulator’s plan of action for the crypto sector.
The head of the Brazilian financial markets regulator said that the agency will roll out a “decree” in “the next few days” that will allow government-appointed bodies to better police the sector. Notably, he also stated that “cryptoeconomics” would work alongside “the traditional economy.”
Cryptoeconomics refers to the combinations of cryptography, computer networks, and game theory which provide secured and decentralized systems which use some set of economic incentives to provide for their maintenance.
Additionally, the president stated that the decree will likely grant the regulator the power to determine which tokens are securities. Sources suggest that the CVM is expected to begin “regulating all crypto assets that fit the definition of security.” Nascimento was quoted as stating:
Whenever something touches on the field of securities, it will fall under the remit of the CVM.
The Brazilian central bank is expected to function as the regulatory body for tokens that are not classified as securities. The CVM head stated that crypto regulation had thus far been “very well received” by the sector.
Nascimento added that the regulator is also focusing on a decentralized finance (DeFi) project called Open Capital Market. He stated that the regulator was working on the project in collaboration with the central bank. The regulatory chief said that he expected Open Capital Market to roll out sometime this year. He stated:
We are going to bring decentralized finance to the capital market. It will start with the transfer of custody of funds.
The CVM head late last year had claimed that the CVM’s regulations would not hamper domestic crypto market development. He had also stated at the time that his objective was to “help the development of the crypto space” and to avoid making “rules” that could “strangle” the sector.
Last month, the central bank claimed that it was also looking to tighten crypto regulations and it stated that its CBDC project would help foster domestic businesses. The bank also claimed that while other nations were focusing on retail-focused CBDC models, the Brazilian CBDC was being designed to help small businesses grow at a faster rate.
Brazil has largely been in favor of cryptocurrencies in recent years. Todayq News reported data published by the Brazilian tax authority (RBF). As per data, almost 42,000 companies invested in cryptocurrency during October last year. The October figures broke September records wherein 40,161 companies had invested in crypto.
In October, Rio de Janeiro’s city hall released an order in its Municipal Gazette stating that city officials would work with businesses that specialize in converting crypto assets into fiat currency. The authorities wanted to enable inhabitants of Rio to swiftly pay their property taxes in crypto.