In view of the possible impacts of recent technological innovations in the Brazilian financial market and complementing the note recently released in October 2017, the Brazilian Securities and Exchange Commission ("CVM") released a set of Frequently Asked Questions (FAQs) regarding the operations known as Initial Coin Offerings ("ICOs").

CVM addressed eight questions related to the matter, establishing a position on issues such as (i) the concept of ICOs, (ii) treatment given to ICOs involving assets that fit into the definition of security, and (iii) the differences between the prospectus required in public offerings and the so-called "white papers" commonly verified in ICOs.

Also showing that it is aware of the growing interest of the economic players in virtual currencies, the Brazilian Central Bank (BACEN) issued Communiqué No. 31,379 on November 16, 2017, in which it warns about the risks arising from custody and trading of virtual currencies.

In brief, the Central Bank warned of the equity risks arising from the volatility of assets and the scarcity of regulations applicable to players in this market. Furthermore, it clarified that operations with virtual currencies involving international transfers referenced in foreign currencies do not exclude the obligation to comply with foreign exchange regulations.

Both CVM and BACEN have stated that they will continue to observe the virtual currency market and if deemed necessary, they will intervene within their respective jurisdiction.