Investment funds are now permitted by the Brazilian Securities and Exchange Commission (CVM) to invest in cryptocurrency. The CVM’s Resolution 175, which was drafted in the previous year and is set to take effect on October 2, outlines the guidelines that these institutions must adhere to when investing in crypto. Experts anticipate a surge in interest in the industry.
Now, #Brazilian investment funds can invest up to 10% of their portfolio in #crypto. There are limits put forth by the #CVM, including allowing the purchase of crypto only from authorized exchanges. https://t.co/FxYVgLJkI5
— Bitcoin.com News (@BTCTN) October 4, 2023
New Brazilian CVM Resolution 175: What You Need to Know
Last year, the Brazilian Securities and Exchange Commission (CVM) introduced Resolution 175, which went into effect on October 2. This resolution allows investment funds to invest directly in cryptocurrency in Brazil, with a maximum limit of 10% of their portfolio.
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However, there are limitations set by the CVM, as these institutions can only purchase digital assets from exchanges approved by the country’s central bank or international regulatory bodies. While this reduces the options for investment funds, the resolution is seen as a recognition and legitimization of the interest of institutions in the cryptocurrency sector.
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The number of available crypto exchanges is limited, which in turn restricts the variety of crypto assets that can be purchased. This indirectly forces investment funds to only invest in cryptocurrencies listed by these exchanges.
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Sanas justified the 10% investing limit as a measure to safeguard investors against market downturns, citing the example of FTX’s bankruptcy last year. Sanas emphasized the need for investor protection.
If the funds had invested the 10% allowed in FTX crypto assets, what would have happened? The resolution advanced with the necessary precautions for a financial or capital market. It is the CVM’s role to defend investors.
Additionally, he clarified that there has only been a marginal allocation of funds, ranging from 1% to 3%, towards digital assets due to the prevailing market conditions, which have not led to a significant shift of these market players towards cryptocurrencies.
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