January 12, 2018 / 5:57 PM / a year ago

Brazil regulator bans funds from buying cryptocurrencies

SAO PAULO, Jan 12 (Reuters) - Brazil’s securities regulator on Friday prohibited local investment funds from buying cryptocurrencies, making it the latest global markets watchdog to call for caution with the volatile asset.

Cryptocurrencies cannot be considered financial assets, regulator CVM ruled, in effect barring funds from investing directly in assets such as bitcoin.

Local funds interested in investing indirectly in cryptocurrencies by taking a stake in foreign funds should await further clarification from CVM, the ruling added.

CVM and Brazil’s central bank published a joint statement in December that warned of risks associated with cryptocurrencies. Brazilian policymakers have so far stopped short of introducing regulation.

The value of bitcoin, the world’s No. 1 cryptocurrency, plummeted on Thursday after South Korea’s government said it planned to ban virtual currency trading, although it has since trimmed some of those losses.

The cost of bitcoin in U.S. dollars soared 1,500 percent last year, sparking concerns of a potential bubble. (Reporting by Alberto Alerigi Jr.; Writing and additional reporting by Bruno Federowski, Editing by Rosalba O’Brien)

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