Fintech Market Overview

This article does not constitute legal advice.

Fintech in Brazil


Brazil has faced a remarkable skyrocket in fintech sphere recently. The Distrito Fintech Mining Report 2021 reveals, that there were found 1,158 fintech bodies operating at the time of the report was drawn up. The majority of them were involved in payments and credit business. Apart from this, there was detected a substantial increase in banking-as-a-service approaches, which means that businesses that were the financial market actors effected payments and searched for banking solutions for customers operating within the entire infrastructure of fintechs legalized to work in this field by BACEN.1

There was introduced a significant step in the sphere of cutting-edge innovations aimed at regulating the foreign exchange market of the country in 2021: implementation of Law No. 14,286/2021. This instrument covers Brazilian capital located in foreign countries, foreign capital within Brazil and the procedure for providing BACEN with data concerning foreign exchange transactions as well. The headway ensured by the Law is that fintech businesses and other payment bodies operating outside the countries obtained the up-to-date regulative instrument. On the contrary, prior to the Law's enactment, the only institutions to render the relevant services within foreign markets were banks. Moreover, the document holds BACEN liable for implementing the relevant regulations in the future, which provides it with opportunity to work in autonomous way in order to apply the regulations that keep track of innovative concepts in the financial and technology sphere.2

Regulations on building up and operation of the regulatory sandbox were introduced in Instruction No. 626 issued by CVM as of May, the 15th, 2020. In addition, it provides regulations concerning an experimental regulatory environment in order to let legal entities be acquainted with oncoming formats of innovative businesses intended for effecting transactions within the security market. This is the promising step forward that might spur innovative approaches in the capital markets due to clarification of the issues concerning legal frameworks in which the market actors will have to work while cutting down on costs allocated to implement innovations, including goods, services and business concepts; apart from this, it allows the actors’ customers feel more integrated into financial activities.2

The Brazilian state authorities also introduced Law No. 14,286 as of December, the 29th, 2021 also known as the new Legal Framework for Foreign Exchange which purpose is to update the currently existing regulations for the foreign exchange market that do not meet the contemporary market environment. It is intended for making it easier for the Brazilian Real to enter the international transactions, as well as to harmonize the national regulations with the international agenda in order to satisfy needs of Brazilian businesses.2

As for a specific kind of operating license for fintech businesses, it is has not been stipulated in Brazilian laws so far. In fact, regulative impact on such companies depends upon the nature of services rendered by the, as well as by the segment of economy they belong to.2

The majority of the aforesaid regulations are implemented by bodies that are integrated into the National Financial System (SFN), and the scope of its responsibility is identified in Article 192 of the Federal Constitution as of 1988. In general, they the following:

  • the National Monetary Council, which is responsible for currency, credit, capital and exchange segments;
  • the National Council for Private Insurance, which responsible for private insurance segment; and
  • the National Council for Complementary Pension, which administers closed pension funds. 2

Each segment is being supervised by a relevant authority as follows:

  1. BACEN, intended for regulating financial bodies, money, credit, payments and exchanges ones;
  2. CVM, which supervises over the flow of securities, commodities and futures;
  3. SUSEP, responsible for the insurance industry; and
  4. the National Complementary Pension Superintendence, to regulate the private closed pension funds segment. 2

The Brazilian market is reputed to be a very promising one, since the amount of fintechs and financial transaction has spurred in the course of the last years dramatically. It seems to be necessary for the regulator to cut down on entry constraints for newbies coming to the market in order to implement breakthrough ideas there, as well as to simplify systemic and operational rules to achieve a proper level of transparency without prejudice to safety and efficiency of transactions. In other words, the Brazilian authorities are inclined to skyrocket the level of competition between national financial institutions.2

It is the strong point of the Brazilian authorities that they are capable to demonstrate team behavior because they tend to work jointly, multiply their joint effort through cooperating with the private segment with a view to spur implementation of cutting-edge techs that update the structure of financial services in the whole and increase its efficiency.2

The authorities go on a thin ice: they have to avoid introducing any regulations that might suppress business initiative of the financial market actors that develop it and, meanwhile, hold the proper level of security within the market. This innovative activity of the authorities builds up a framework for the citizens to participate in financial transactions more proactive and lets up-to-date techs in the Brazilian economy and civil society.2

2021 was the illustrative year since it demonstrated that a variety of stakeholders (no matter, belong them to the private or state segment) desire to push the development of fintech-ok environment in the nearest future.2

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Brazil Fintech Lawyers

Kristina Berkes

Kristina Berkes

Participation as a lawyer at investment venture funds, leading venture M&A deals in IT, supporting iGaming and business assets

  1. https://materiais.distrito.me/mr/fintech-report
  2. https://thelawreviews.co.uk/title/the-financial-technology-law-review/brazil
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