Brazilian Stock Exchange approves two new crypto ETFs in Latin America

The Brazilian Stock Exchange (B3) approved the first crypto ETFs in Latin America and leading to a new milestone for the market.

The Brazilian Securities and Exchange Commission, or CVM, approved two cryptocurrency ETFs this week — one 100% Bitcoin and the other composed of five cryptocurrencies, in addition to Bitcoin (BTC).

For QR Asset Management, manager of the Bitcoin-only ETF, the product could accelerate the launch of a similar product in the United States, since the CVM, as well as the Securities and Exchange Commission, or SEC, are part of the International Organization of Securities Commissions, or IOSCO.

Both ETFs will be traded on the Brazil’s Stock Exchange, or B3. According to Brazil Journal, two of the country’s main banks, Itaú and BTG Pactual, have already stated to offer Hashdex’s ETF to their customers.

The QR ETF will trade on the B3 with the ticker QBTC11, while the one from Hashdex will have HASH11 as its ticker. ETF HASH11 trading is expected to start this month, while QBTC11 ETF is expected to begin in Q2 2021.

In the case of QR ETF, the index used to calculate the price of Bitcoin will be the Chicago Commodities Exchange.

Fernando Carvalho, CEO of QR Capital, holding company of QR Asset, sees this movement as an important milestone for innovation in the Brazilian capital market. In internal communication with Cointelegraph, he said:

“Our ETF, to be traded with the QBTC11 ticker, is a milestone in the Brazilian market. The asset ends up acting as a double hedge, as it is a digital commodity and at the same time, it is traded in dollars on the world market. Its price is unrelated with other asset classes, which means that it is increasingly being adopted by large managers and investors within diversified portfolios.”

Hashdex’s ETF will replicate the Nasdaq Crypto Index (NCI), an index developed by Nasdaq and Hashdex. In September 2020, the Brazilian Hashdex got approval from the Bermuda regulator and together with Nasdaq, approved the world’s first Bitcoin ETF — the Hashdex Nasdaq Crypto Index ETF.

Beyond Brazil, the only other country to approve its own Bitcoin ETFs is Canada.

NCI consists of six cryptocurrencies: Bitcoin, Ethereum (ETH), Stellar (XLM), Litecoin (LTC), Bitcoin Cash (BCH) and Chainlink (LINK), and is rebalanced quarterly.

Custody of Hashdex’s assets is made by companies such as BitGo, Coinbase, Fidelity and Gemini, which are all mediated and regulated in the USA.

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Argentina’s Ripio acquires Brazil’s second-largest crypto exchange

Argentinian crypto firm Ripio has acquired Brazil’s BitcoinTrade, Brazil’s second-largest exchange by volume.

Ripio, a digital asset company based in Argentina, has purchased major Brazilian crypto exchange BitcoinTrade.

According to Argentine newspaper Ambito, the acquisition is part of Ripio’s plan to spread across South America. BitcoinTrade is reportedly the second-largest crypto exchange in the country by volume.

Ripio CEO and co-founder Sebastián Serrano said it made the purchase to “expand access to the world of digital assets” in the region.

“We are convinced that Ripio is the best company to extend the path we are building with BitcoinTrade in Brazil,” said BitcoinTrade founder Carlos Andre Montenegro.

Founded in 2013, Ripio claims to be one of the largest crypto exchanges in South America, with employees based in Argentina, Brazil, Mexico, Uruguay and Spain. The company launched a crypto trading platform with over-the-counter services in 2019, and was named as one of the World Economic Forum’s Tech Pioneers last year.

In November, an Argentine lawmaker proposed legislation to provide a national framework for crypto in the country. The bill is intended to address “very arbitrary rules” governing Argentina’s crypto ecosystem.

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Leading Brazilian soccer team to tokenize FIFA player transfer fees

Brazilian soccer club CR Vasco da Gama and crypto exchange Mercado Bitcoin are looking to tokenize early-career transfers in the soccer world.

Vasco da Gama, one of the leading teams in Brazilian football, and Mercado Bitcoin, one of the largest cryptocurrency exchanges in Latin America, have announced plans to tokenize the rights of the solidarity mechanism of FIFA.

The FIFA Solidarity Mechanism is a part of the FIFA Transfer Regulation, which acts as a selling right for a player and encourages clubs to develop young players. Through this mechanism, up to 5% of the total value of each international transfer of an athlete can be shared with all the clubs that an athlete went through during his career until he was 23 years old.

Through this partnership, Vasco and Mercado Bitcoin will tokenize the solidarity mechanism, and holders of the tokens will be entitled to a percentage of the sale value of any player to the athlete’s forming club.

According to information that Mercado Bitcoin provided to Cointelegraph, in total there will be 500,000 tokens, which they hope to sell for a total of R$50 million (around US$ 9 million). Each token will correspond to a fraction of the solidarity mechanism rights of 12 athletes who joined Vasco da Gama’s youth teams, among them football stars like Philippe Coutinho, Douglas Luiz, Alex Teixeira, and Allan Marques Loureiro, each of them successful in other prominent teams in Europe and Asia.

“We are a club that has traditionally developed great players. Many important Brazilian players emerged in São Januário”, said Alexandre Campello, Vasco’s president, citing the club’s headquarters.

According to Campello, the club has been looking for opportunities to use cryptocurrencies to generate new revenue since 2018. He explained:

“This initiative is part of the strategic planning actions implemented by the current management, with a strong commitment from the financial, legal and football departments, and with the financial assistance of KPMG.”

To achieve its goals, Vasco is also a partner of MBDA, a company in the Mercado Bitcoin ecosystem responsible for the tokenization of several alternative assets. The club has also worked with renowned lawyers specialized in matters related to football, digital currencies and securities regulation.

Also according to the announcement, the team formally consulted with the Brazilian Securities and Exchange Commission to confirm the understanding that the token is not classified as a security.

In addition to making the token available on its platform, Mercado Bitcoin has already guaranteed the pre-purchase of 20% of the 500,000 tokens, whose sale will be credited to Vasco da Gama before the opening of the sales for the average investor.

“This is a token that should change the way football deals with FIFA’s solidarity mechanism. Vasco is the first club in the world to have this token, but we want other clubs to have access to it,” says Reinaldo Rabelo, CEO of the Mercado Bitcoin. “We are confident that we are creating a new source of revenue for football clubs.”

launched his ownSoccer is at the forefront of sports embracing tokenization. Weeks ago, Japanese soccer star Keisuke Honda launched his own fan-engagement crypto.

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Brazilian gov’t gets help from US Justice Department to seize $24M in crypto

The government of Brazil requested assistance from US authorities regarding a crypto fraud scheme called “Operation Egypto.”

According to a Wednesday filing, the U.S. Justice Department seized $24 million in virtual currency pursuant to an official request from the Brazilian government.

The Department of Justice, or DoJ, said that the government of Brazil requested its assistance in connection to a crypto fraud scheme called “Operation Egypto.” Authorities in the South American nation reported that more than 10,000 Brazilians may have been defrauded from the scheme, in losses estimated at roughly $200 million.

The department seized funds connected to Brazilian national Marcos Antonio Fagundes, one of the individuals allegedly involved in the case. According to information that Brazilian authorities provided to the DoJ, Fagundes is charged with the operation of a financial institution without legal authorization, fraudulent management of a financial institution, misappropriation of funds, money laundering, and securities law violations. He and his conspirators allegedly operated an unregistered financial institution to hold crypto assets he obtained from victims by making “false and inconsistent promises” about the way the funds were invested and exaggerated the rates of return.

The funds were purportedly held on a U.S.-based crypto exchange. The DoJ said that a cryptocurrency firm holding the accounts complied with the seizure order, implying it was a company within its jurisdiction.

According to the Treaty on Mutual Legal Assistance in Criminal Matters between the United States and Brazil that has been in effect since 2001, either government can make a request regarding “proceeds or instrumentalities of offenses” subject to seizure located in the other’s territory. A Brazilian court issued an order calling for the seizure of any virtual currency Fagundes controlled or owned in the United States, which preceded the government filing an application to enforce the order in U.S. District Court for the District of Columbia.

The DoJ currently has the authority to confiscate cryptocurrency in connection with legal cases in the United States and later auction off the funds. In February, the government body announced that it would be selling roughly 4,040 Bitcoin (BTC), when the price was $9,200. Assuming the anonymous buyers purchased the funds at roughly market price, they could be looking at a 63% return with BTC’s rise to $15,000 today.

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