The Brazilian regulatory body CVM notes that the main objective is the protection of investors. The communication reinforces a 2013 provision that established a deadline of 2 working days.

The CVM (Brazilian Securities Commission) issued on Monday, December 9th, a new communication that reinforces, among other guidelines, that withdrawals of investments by customers must be completed within 48 hours after the request made to custody companies.

It was noted that CVM/SMI8/2019 Official Circular Letter must be complied with by all the companies that are authorized to operate in the Brazilian exchange market, including cryptocurrency exchange houses.

The document establishes a series of guidelines on what the commission calls “the best practices” that should be adopted by cryptocurrency exchange and custody companies, to handle transfer requests. According to the CVM, the purpose of the communication is for the market to act in the interests of investors.

In this regard, Francisco José Bastos Santos, from the Superintendence of Market Relations and Intermediaries of the CVM, said that the custodian must not only act diligently to mitigate the possibility of fraud in the transfer of securities, but also to privilege the interests of the customer and, especially, it must comply with the Regulation in terms of two working days for the transfer of cash.

Good Practices

The CVM letter also instructs companies to make available, both on their websites and in their applications, a step-by-step guide on how the investor should proceed to formalize transfer requests. The regulatory body also requires companies to provide the investor with a team capable of answering his or her questions, either by e-mail, online chat or phone.

It should be noted that the determination of 48-hour withdrawal period is not new, since it is already contained in Article 10 of CVM Instruction 542/13, published in the Federal Official Gazette on December 26th, 2013.

The determination of the CVM can be understood as another message to suspicious companies or those that have already been investigated for the practice of the Ponzi scheme or financial pyramid. Some of the cases with greater media coverage are those involving Atlas Quantum and the companies of the Bitcoin Bank Group (GBB), the latter being in the process of judicial recovery.

Previous Measures

The letter is the second measure of the CVM in less than a week that has a direct impact on the cryptocurrency market. On Friday, December 6th, the CVM issued CVM Instruction 617 to fight money laundering and terrorist financing.

This instruction determines, among other aspects, a greater detail of the routines linked to the “know your customer” (KYC) policy, which is part of the compliance required of companies. Its purpose is to prevent fraud, but its use is not yet standardized by cryptocurrency exchange houses.

Within the CVM there is concern about the scams that use cryptocurrencies and money exchange brokers that act as bait. The regulatory body has a special webpage on which it alerts investors about the “main irregular activities” that occur in the market.

By Willmen Blanco

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