USE OF CRYPTOCURRENCIES TO PAYMENT OF THE CAPITAL STOCK OF COMPANIES

From the edition of the Circular Letter SEI No. 4081/2020, from the Special Secretariat for Debureaucratization, Management and Digital Government (“Secretariat”), on December 1, 2020, the National Department of Business Registration and Integration (DREI) adopted an understanding about the legality of using cryptocurrencies to payment of the capital stock of companies.

To support this position, were considered the understanding of the Brazilian Central Bank (“Bacen”) and the Securities Commission (“CVM”), in which virtual coins can not to be confused with electronic coins and that, accordingly the economic context of its issuance and the rights granted to investors, it may represent securities.

In addition, it was also considered the Brazilian Federal Revenue (“RFB”) understanding that cryptocurrencies is considered financial assets, defining them as intangible assets that have pecuniary valuation, is negotiable and can be used for different purposes (i.e.: investment, purchase of products, access to services, etc.).

In this line of approach, considering that there is no express legal prohibition for the payment of capital with cryptocurrencies, as well as the Brazilian Civil Code and the Brazilian Corporation Law accept any asset susceptible to monetary valuation as an asset that can constitute company’s capital stock, the conclusion is that such method is legal.

Regarding the form of payment of capital stock through cryptocurrencies, the Secretariat has indicated that there is no special procedure and the payment should occur accordingly to the rules applicable to the payment of capital stock through movable assets, limiting the Boards of Trade to examining the legal formalities of the act to be filed.

However, it is important to emphasize that one of the main function of the paid-in capital stock of a company is to represent a guarantee that the company can fulfill its obligations, including financial ones, undertaken during the exercise of its activity. In this sense, is expected a certain degree of stability of the company’s assets, in order to fulfill the legal requirements.

Therefore, it is inferred that the referred letter did not address the great risk of the volatility of the value of the cryptocurrencies. Considering that cryptocurrencies have: (i) high volatility, which makes it difficult to predict their price and, consequently, the equity associated with it; and (ii) decentralized networks governance (unpermissioned ledgers), which can difficult the audit of Brazilian authorities.

Additionally to the mentioned above, the fact that there is no specific regulation for cryptocurrencies in Brazil make this new alternative for paying in capital stock quite uncertain, as the company is in a position very susceptible to losses, with risks increasing according to the proportion of digital assets over the total paid-in capital stock.

Given the above, regardless of DREI’s innovative understanding, which provides economic recognition of cryptocurrencies and enables the expansion of business relations, it is necessary a specific national regulation of cryptocurrency in order to mitigate the involved risks.

Our office is at your disposal to clarify any doubts in this regard and assist you in the draft and registration of such documents.

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