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Legal Update

CVM issues clarification memorandum regarding Initial Coin Offerings (ICOs)

16 October 2017
Tauil & Chequer Legal Update

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.

In addition, the memorandum also highlights risks related to fraud or Ponzi schemes, unsuitability, as well as operational risks in trading environments not monitored by the CVM and the possibility of liquidity shortage.

The CVM concludes the memorandum by stating that it is aware of the evolution of the ICOs and that it may at any time intervene in order to ensure the stability and development of the capital market in Brazil.


  • Carlos Motta
    T +55 11 2504 4210
  • Eduardo Lima
    T + 55 11 2504 4238
  • Daniel Becker
    T +55 21 2127 1640
  • Priscilla Santos
    T +55 11 2504 4269
  • Pedro Lameirão
    T +55 21 2127 1626
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