Comparative Guides

Welcome to Mondaq Comparative Guides - your comparative global Q&A guide.

Our Comparative Guides provide an overview of some of the key points of law and practice and allow you to compare regulatory environments and laws across multiple jurisdictions.

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4. Results: Answers
Blockchain market
Which blockchain applications and protocols have become most embedded in your jurisdiction?

Answer ... In terms of crypto coins, the top five on the Brazilian market are Bitcoin, Ether, XRP, Tether and Litecoin. Bitcoin is by far the most traded, although use of Ether is growing.

Smart contracts and other blockchain applications are still rare in Brazil, but we have observed a preference for Bitcoin and Ethereum protocols among the existing developers.

For more information about this answer please contact: Luciano Costa from Fleichman Sociedade de Advogados
What potential new applications/protocols are most actively being explored?

Answer ... Since late 2017, discussions on initial coin offerings (ICOs) have been ongoing in Brazil. In October that year the Brazilian Securities Commission (CVM) issued a formal press release indicating that an ICO would be considered a securities public offer and would thus be subject to the applicable regulations. Since then, however, although many stories about potential ICOs have been reported, no actual ICOs have taken place under the Brazilian regulation.

We have recently seen some initiatives involving asset tokenisation led by crypto coin exchanges and investment funds. These have been dubbed ‘alternative’ investments, in comparison to traditional investments. They basically involve the offer of non-security tokens relating to real estate assets, judicial rights or other similar assets.

In the field of smart contracts, a few start-ups are now offering services using smart contracts and some major companies have declared an interest in using smart contract and blockchain-based applications in specific areas of their product and service offerings. However, it is still unclear how effective those applications currently are and will be in the near future.

For more information about this answer please contact: Luciano Costa from Fleichman Sociedade de Advogados
Which industries within your jurisdiction are making material investments within the blockchain space?

Answer ... The finance industry has the greatest interest in developing blockchain-based products. In this regard, the crypto coin sector is particularly relevant and has grown fast. There are now dozens of exchanges trading all relevant crypto assets and developing other services and products based on blockchain. Sadly, however, there has also been a wave of fraud and similar schemes using crypto assets as bait to lure ill-informed investors.

Within the financial sector, small investment firms, fintechs and crypto exchanges have invested heavily in blockchain solutions. Financial products should benefit significantly from the disruptive aspects of blockchain applications, and we are noticing relevant movement in securities, insurance and other related markets.

In other sectors of the Brazilian economy, interest in blockchain and its potential uses is also increasing. However, doubt and uncertainties remain as to how the technology might be used most effectively. To address this knowledge gap, two other segments have become very active in the blockchain space: training and legal. There has been a surge in the number of blockchain seminars, courses, workshops and similar programmes, to fill the need for quality information on the subject. Law firms are also leading efforts to enhance understanding of blockchain technology and its potential uses in many industries.

For more information about this answer please contact: Luciano Costa from Fleichman Sociedade de Advogados
Are any initiatives or governmental programmes in place to incentivise blockchain development in your jurisdiction?

Answer ... The main financial regulators are jointly creating a regulatory sandbox to promote the development of financial products using blockchain and other new technologies. A new regulation is under public consultation and should become effective in the first quarter of 2020. The agencies have primarily drawn on the experiences in the United Kingdom and the European Union in designing the sandbox.

In 2019 the Brazilian federal government also announced several studies and initiatives aimed at promoting blockchain applications in general. These initiatives are being led by different entities and agencies, such as the Brazilian Development Bank, the Ministry of Science and Technology and the Federal Service of Data Processing. Major states, such as São Paulo and Rio de Janeiro, have also announced blockchain-related projects.

For more information about this answer please contact: Luciano Costa from Fleichman Sociedade de Advogados