- Brazil has prohibited major pension funds from investing in cryptocurrencies.
- Countries like the U.S. allow some limited exposure to crypto for pension funds.
Brazil’s National Monetary Council (CMN) announced that it forbids closed pension funds from investing in cryptocurrencies like Bitcoin. These are funds that manage the savings of tens of thousands of corporate employees and union members. The council cited high volatility and risks as the reasons behind this ban.
A Ministry of Finance notice disclosed, “The resolution also prohibits investments in virtual assets, considering their specific investment characteristics and associated risk.”
These are funds that Entidades Fechadas de Previdência Complementar (EFPCs) manage for unionized and company-employed workers. They are usually invested in bonds and equities. Brazil’s approach is contrary to a strategy that countries like the U.S. have taken, which allows limited crypto exposure in pension funds.
See Related: South Korean Pension Fund Dives Into Digital Assets With $20 Million Coinbase Investment
Brazil’s Crypto Bar. Protecting Pensioners Or Stifling Innovation?
Industry experts believe that CMN’s prohibition of closed pension funds may limit Brazil’s ability to compete in the digital economy. It could hold back the country’s innovation as more nations embrace Bitcoin and other cryptocurrencies.
However, this decision aligns with Brazil’s cautious stance on digital assets despite adopting Bitcoin reserves and cryptocurrency exchanges to elevate economic prosperity. It aims to protect retirees’ funds from risks associated with cryptocurrencies.
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