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ARTICLE · 24 OCTOBER 2017

CVM Issues Clarification Memorandum Regarding Initial Coin Offerings (ICOs)

Mayer Brown
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On October 11, 2017, the Brazilian Securities and Exchange Commission (CVM) issued a clarification memorandum on Initial Coin Offerings (ICOs), defined as "public funding in exchange...

BrazilCorporate/Commercial Law
Carlos Motta
Carlos Motta
Eduardo Lima
Eduardo Lima
Daniel Becker
Daniel Becker
Priscilla Santos
Priscilla Santos
Pedro Lameirão
Pedro Lameirão
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On October 11, 2017, the Brazilian Securities and Exchange Commission (CVM) issued a clarification memorandum on Initial Coin Offerings (ICOs), defined as "public funding in exchange for the issuance of virtual assets, also known as tokens or coins, with the investing public".

In the text, the CVM clarified the risks arising from such transactions and their relation with the current regulatory framework in the securities market. These CVM clarifications are inspired by the opinion issued by the U.S. Securities and Exchange Commission (SEC) in July of this year.

In short, the public offerings of virtual assets within the definition of security that are not in compliance with regulations will be deemed irregular and therefore subject to the applicable penalties. On the other hand, according to the CVM, there are ICOs that are not covered by their regulatory competence, because they do not represent public offerings of securities.

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