By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Due to the risks associated with cyber transactions, crypto-currencies such as the popular Bitcoin, will not be accepted as a financial asset by investment funds, Brazil’s Securities and Exchange Commission (CVM) said on Friday.

Bitcoins are becoming increasingly ore popular in Brazil, photo by David McBee/Pexels.

“The CVM’s technical area informs investment fund managers that Crypto-Coins cannot be classified as financial assets,” said the statement issued to funds last week and signed by Institutional Investor Relations Superintendent Daniel Maeda. “For this reason, no direct acquisition of these virtual currencies is allowed by regulated investment funds,” concluded the note.

For Maeda, ‘the legal and economic nature of these investment modalities has been debated, both in Brazil and countries around the world, with no conclusion reached until today as to its risks and legality’.

In December of 2017, Central Bank President Ilan Goldfajn warned of the risks in the virtual currency market. “Virtual currencies as they are today, skyrocketing, not pegged to anything, and with no one to regulate them, lead to such risks that the Central Bank has issued a warning of the risks.”

Although noting that the Commission’s decision bars traditional investors from taking advantage of the new types of investments, those who deal in virtual currencies believe that Friday’s decision is not likely to diminish Brazilians’ interest for the cryptocurrencies.

“There has been an increasing interest in these kinds of investments, so much so that there are reports that there are more people registered to conduct transactions in bitcoins and other cryptocurrencies than in the Bovespa (São Paulo Stock Exchange),” Luciano Rolim, marketing manager at Atlas Project told The Rio Times.

According to Rolim, the Atlas Project, operating since October of 2015 in Brazil, believes that the CVM’s decision is likely to be temporary, “We think that this is only temporary, that the prohibition will be lifted as soon as Congress votes on the legality of virtual currencies.”

The outcome of the Congressional debate, however, may not be favorable to companies such as the Atlas project. In late December, the rapporteur of the special committee that discusses the regulation of virtual currencies, Representative Expedito Netto, defended a ban on the issuance, commercialization and use of cryptocurrencies as means of payment in Brazilian territory.

According to the lawmaker, the supply of these coins ‘favors crimes, could cause problems in consumer and economic defense rights and brokerage houses do not guarantee the money invested by consumers’.

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