Earlier this year, the CVM – the equivalent to the SEC in Brazil – had issued a regulation to forbid local funds from investing in bitcoins and other cryptocurrencies.

On September 19, though, the CVM's office for supervision of relations with institutional investors clarified that this regulation does not prevent indirect investment in bitcoins and other cryptocurrencies, by means of acquisitions of other funds' shares or derivatives, as long as these operations are allowed in the foreign jurisdictions concerned.

As the CVM's technical department has pointed out, however, administrators, managers and auditors must keep some precautions in mind when acquiring and maintaining a portfolio that includes bitcoins and other cryptocurrencies.

The CVM highlights the following issues as a concern for market operators: unlawful practices, governance and due diligence, independent auditors and pricing.

As for the possible unlawful practices, the funds must be aware of money laundering, non-equitable and fraudulent practices or price manipulation.

The funds' management must also carry out its operations with due diligence to avoid the purchase of fraudulent cryptocurrencies.

When it comes to valuation, the CVM recommends that the cryptocurrencies must have liquidity so as to allow the periodic pricing of the funds' shares.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.