Crowdfunding is Now Regulated in Brazil

The Commissão de Valores Mobiláros (CVM) in Brazil has published their regulatory regime to legalize investment crowdfunding. The document outlining the rules is embedded below (in Portuguese).

The Investment crowdfunding regulation (Regulation 588) creates a new exemption for issuers of securities to raise funding online. Issuers must use a registered investment platform that has been approved by CVM.

In brief, issuers may raise up to BRL 5 million (about USD $1.5 million) under the exemption within a 180 day period. A new offer under the exemption may only take place 120 days after close of the first.

Some other points of interest:

  • There is a cooling down period of 7 days when an investor may request a refund
  • Only small businesses may utilize the exemption
  • Retail investors are limited to BRL 10,000 per year in investment
  • Accredited or lead investors may invest up to 10% of their annual income or net worth (the lesser of the two
  • Issuers must have a minimum paid in capital of BRL 100,000 and gross revenue of less than BRL 10 Million during the fiscal year prior to the offer
  • There are certain advertising restrictions and issuers must highlight the risk
  • The lead investors concept was incorporated to reduce information asymmetry between issuers and investors

This past May, Otavio Ribeiro Damaso, Director of Regulation of the Central Bank of Brazil, commented that Fintech may be a catalyst to help boost the economy of beleaguered Brazil. A recent Forbes article anointed Brazil as having the worst economy in Latin America. The World Bank predicted that the country will emerge from a painful recession at some point this year. The ongoing political turmoil has not helped the situation.

Damaso said that Fintech may be very positive for the economy;

“I believe there is room for further expansion of credit Fintechs and new regulations would pave the way for that development within a secure judicial framework.”


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