Crowdfunding & P2P Platforms in Brazil

There’s been quite a few legislative initiatives aimed at improving regulation of crowdfunding & P2P platforms in Brazil recently. So, let’s take a closer look at the latest amendments in the regulatory framework & overall regulation of the Brazilian financial sector.

Registering a Crowdfunding Platform in Brazil: Regulators

Under Brazilian law, oversight of all transactions with securities (i.e. the fashion in which securities get distributed, offered & commercialized in the Republic of Brazil or abroad) are the CVM’s exclusive prerogative. The regulator’s rules primarily apply to individuals wishing to launch a crowdfunding platform in Brazil or engaging in activities in the high-tech industry.

Crowdfunding based on investment was recently recognized as an option for small companies seeking to raise funds. As of now, crowdfunding activities are regulated by a CVM directive specifically adopted to govern the way securities are distributed across online platforms.

Registering a P2P Platform in Brazil: Requirements

Functioning as intermediaries in loan transactions is an activity reserved exclusively for  institutions providing financial services. Hence, entities raising funds from 3rd parties to take out loans or carry out intermediate activities are required:

• to apply for permission to function as financial institutions;
• comply with the Central Bank’s rules (BACEN).

BACEN also handles applications submitted by individuals wishing to obtain a financial license in the Republic of Brazil.

To promote new & innovative models of lending, BACEN came up with an initiative to hold public hearings on P2P issues. Following that, a resolution was issued regulating the procedure for obtaining a permit to extend credits in the Republic of Brazil. 

Brazil: Providing Payment Services

Rules applicable to the SPB & regulations developed by BACEN are also used as a basis for regulating payment services in Brazil. The SPB includes systems or services, which, providing permission of relevant authorities is obtained, can:

• repay e-debit & loans;
• engage in transfer of money & assets of financial nature;
• make settlements on transactions with securities.

2018 saw BACEN enact regulations designed to facilitate involvement of businesses in Brazil’s financial services sector & create a more competition-driven market. According to the regulations, using a collateral in the form of receivables for loan-related transactions is allowed under payment agreements. Because receivables constitute the bulk of small companies’ assets, they were expected to experience far fewer difficulties in taking out loans. A greater deal of protection will also be afforded to lenders seeking to conclude agreements with the said companies.

The said rules were in place until late summer 2020. The rules adopted in their place were based on the principles enshrined in BACEN’s circulars & directives, as well as changes connected to registering debit instruments & obtaining a financial license in Brazil.

After they become effective, institutions providing financial services will have to apply for permission to ensure continued provision of such services. The amended regulations also set thresholds for using accounts receivables as a collateral for payment instruments.

Providers of financial services that have in excess of five hundred thousand active clients must now take part in an infrastructure created for instant payments. That said, taking part in the SPI isn’t mandatory for organizations providing clearing & settlement services in Brazil. Its sole purpose is to settle liquidity transactions between SPI participants as part of the infrastructure for instant payments.