Brazilian Securities and Exchange Commission (CVM) has banned administrators and fund managers in Brazil from investing in cryptocurrencies, such as bitcoin, litecoin and ethereum. The regulating institution of the national market published an official notice on Friday about the restriction. A fund looking to invest via foreign funds “should await further clarification”
Previously, central bank President Ilan Goldfajn had said: “The bitcoin is a financial asset with no ballast that people buy because they believe it will appreciate. That is a typical bubble or pyramid…The central bank is not interested in bubbles or illicit payments.”
A commission was set up by the government in May 2017 to discuss regulation of cryptocurrency in the country, and seven public hearings were held since then, during which experts spoke to politicians on the subject.
The last was held in December, and the final decision made by Federal Deputy Expedito Netto was not positive: “We have decided to position ourselves by the prohibition of issuance in national territory, as well as to prevent its commercialization, intermediation and even acceptance as a means of payments for settlement of obligations in the Country.”
According to the CVM, despite the discussion on the legal and economic nature of the cryptocodes, both in Brazil and in other countries, “no conclusion was reached.”
Central Bank warns that this type of asset is not audited by the institution and does not have a burden on other assets. “Its value derives exclusively from the trust conferred by individuals to its issuer,” the statement said.
Another point is that there is no conversion guarantee for sovereign currencies and, in this way, the bailout is subject to the institutions that make the conversion, which are not regulated by the monetary authority.
Writing in Valuewalk, Brazilian author and Youtube star Raphaël Lima laments: “Brazil needs Bitcoin…According to a study by Credit Suisse, Brazil’s productivity has not risen since 1981, and it’s not going to rise if the government keeps banning everything that can make us more productive.”