Brazil’s CVM Is Investigating Bitcoin Fixed-Income Tokens

Brazil’s Securities and Exchange Commission (CVM) served a subpoena to Mercado Bitcoin. The platform for exchanging cryptocurrencies is the biggest of its kind in the country. 

The purpose of the summons is to learn more about the company’s operations. 

Token Fixed-Income Investments Led to A Subpoena for Mercado

The subpoena addresses guaranteed returns on bitcoin investments. There would be a need for disclosure of these investments from the company. The company must also clarify whether or not they plan to make them accessible to the public.

In the future, cryptocurrency markets will be more than just an exchange. Several bitcoin exchanges provide banking-related services and products. This is the case in several parts of the world, such as Latin America, where some nations have very high inflation rates. 

The subpoena seeks information regarding the features and functionality of the Mercado Bitcoin website. This kind of inquiry pertains majorly to the “Tokens,” subsection. The CVM claims that investing in tokens allows investors to spread their risk. 

In theory, diversity may help reduce exposure to risk while increasing returns in several different settings. If a user has amassed a certain number of stablecoins, they will be able to purchase these tokens. 

In addition, they likely provide a higher return than traditional savings products in a shorter time frame.

Insights On the Subpoena Issued by the CVM

The CVM needs detailed explanations of how the use these tokens. Mercado Bitcoin must provide the total number of customers who bought these things and the identities of those customers beginning in January 2020. What’s more, Mercado Bitcoin has to confirm whether or not it wants to sell these tokens again in the future. 

The company might face penalties if the CVM determines the products are not up to code. In any case, Mercado Bitcoin insists it is not providing illegal services. The firm issued a statement clarifying that it does not conduct public offerings of securities outside the extent of its permission as an approved crowdfunding and investment management platform.

Also, the company made it clear that it is prudent to stay out of the way of regulatory agencies and similar organizations. The corporation asserts that it deliberated over the tokens’ underlying structure before deciding to deliver the items in 2020. The company also stressed avoiding violating the legal sphere by any means possible.

There have been two prior waves of layoffs at the firm. The first one was in June, and the second one was just this month. These problems are the most current ones the firm has faced this year. Mercado Bitcoin closed a successful Series B funding round last year, in 2021. As a consequence of this funding round, the company’s valuation increased to over $2 billion. In this case, Softbank was the backer.