Banks, Financial Services, Fintechs and Digital Assets Newsletter No 8 – August, 2023

REGULATION

Federal Executive Branch

Federal Executive Branch publishes Law No. 14,652, of August 23, 2023

On August 23, 2023, the Federal Executive Branch published Law No. 14,652 (“Law No. 14,652/2023” or the “Law“), which provides for the possibility of granting, as a guarantee for credit transactions, of the right of redemption guaranteed to participants in open supplementary private pension plans, to policyholders of personal insurance, shareholders of the Individual Programmed Retirement Fund (“Fapi”) and holders of capitalization bonds.

However, the provision only applies to credit transactions granted by financial institutions, which may be linked or not to the operator of the supplementary private pension plan, personal insurance or capitalization bond, or to the managing institution of Fapi. In other words, the redemption right is assured to:

(1) participants in open supplementary private pension plans and policyholders of personal insurance, under the capitalization regime: regarding the mathematical provision eligible for redemption, in which case the deadline for settling the credit transaction cannot exceed the end of the deferral period, in case of plans and insurance with survival coverage, or the period of effectiveness, regarding risk coverage;

(2) Fapi shareholders: regarding shares eligible for redemption, in which case the deadline for settling the credit transaction cannot exceed the period of effectiveness of the Fapi contract; and

(3) holders of capitalization bonds: regarding the mathematical provision eligible for redemption, in which case the deadline for settling the credit transaction cannot exceed the period of effectiveness of the capitalization bond.

The provision of guarantee, in turn, will be subject to a specific contractual instrument signed by:

• • • the credit borrower;
    • the supplementary private pension entity;
    • the insurance company;
    • the managing institution of Fapi or the capitalization company, as the case may be; and
    • the institution granting the credit.

In addition, according to the Law, the instrument will be linked to the document formalizing the contracting or adhesion to the supplementary private pension plan, personal insurance, Fapi or capitalization bond, as the case may be.

It is also worth highlighting the need to comply with the regulations and technical characteristics of supplementary private pension plans, Fapis, personal insurance and capitalization bonds, as well as the specific rules governing redemptions and tax legislation, in the event that the redemption right is granted. Regarding the total amount offered as guarantee in credit transactions, it will not be:

(1) redeemed (i) by the supplementary private pension plan participant, (ii) by the insured, (iii) by the Fapi shareholder or (iv) by the holder of the capitalization bond before the credit has been settled or the guarantee has been replaced by another, by mutual agreement between the parties; or

(2) carried (i) by the supplementary private pension plan participant, (ii) by the insured or (iii) by the Fapi shareholder without the consent of the institution granting the credit.

Law No. 14,652/2023 also provides for the possibility of assigning assured redemption rights, which, under the terms of the regulation, provides the amount for redemption in favor of the institution granting the credit, in order to settle overdue and unpaid debts.

Open supplementary private pension entities, insurance companies, Fapi managing institutions and capitalization companies are prohibited from imposing restrictions or obstacles to the use of this option, even if the credit is granted by a financial institution that is not linked to these entities.

The Brazilian National Private Insurance Council (“CNSP”) and the Brazilian National Monetary Council (“CMN“) will be responsible for regulating the provisions of Law No. 14,652/2023 in the exercise of their powers relating to granting guarantees for credit operations within the scope of the assured redemption rights.

Finally, articles 84, 85, 86 and 87, of Law No. 11,196, of November 21, 2005, were repealed. The law under discussion establishes the Special Taxation Regime for the Information Technology Services Export Platform (Repes), the Special Regime for the Acquisition of Capital Goods for Exporting Companies (Recap), and the Digital Inclusion Program, among other provisions.

Read Law No. 14,652/2023 in full.

Central Bank of Brazil

BCB Normative Instruction No. 409, August 29, 2023

Normative Instruction No. 409 of the Central Bank of Brazil (“BCB“), published on August 29, 2023, releases version 5.0 of the Open Finance Customer Experience Guidelines.

These guidelines, which must be followed by participating institutions, will be available in its most recent version on the Open Finance web page of the BCB’s website and on the Open Finance Portal in Brazil, maintained by the Open Finance Governance Structure, according to article 44, paragraph 1, of Joint Resolution No. 1, of May 04, 2020.

Among the implemented changes, we highlight the following:

(1) adjustments to the wording of the text, with no change in merit;

(2) changes in section 2, on the fluidity of the Open Finance journey and the development of the journey on the “application” electronic channel;

(3) changes in section 3.3, on the requirements for authorizing the sharing of data and services, including for legal entities;

(4) changes in subsection 4.1.1, on the redirection in the data-sharing journey;

(5) changes in subsection 4.1.2, on the redirection in the payment transaction initiation service sharing journey; and

(6) changes in subsection 4.1.3, on the sharing of joint accounts of individuals.

This normative instruction repeals BCB Normative Instruction No. 298, of August 23, 2022, and will enter into force on December 01, 2023.

Read BCB Normative Instruction No. 409 in full.

BCB Resolution No. 339, August 24, 2023

Provides for the bookkeeping activity of book-entry duplicates, the electronic bookkeeping system managed by an entity authorized to carry out this activity, as well as the registration, centralized deposit and negotiation of these book-entry securities.

Read the Newsletter published on the BCB Resolution No. 339, of August 24, 2023 on the changes to the rules dealing with the regulation of book-entry duplicates in full.

This resolution entered into force on September 01, 2023.

Read BCB Resolution No. 339 in full.

BCB Resolution No. 338, August 23, 2023

Establishes procedures for access by public entities to data linked to Pix keys stored in the Transaction Accounts Identifier Directory (“DICT“) and discloses the regulations for adhesion by interested parties.

This resolution entered into force on September 01, 2023.

Read BCB Resolution No. 338 in full.

BCB Resolution No. 337, August 22, 2023

Amends BCB Resolution No. 277, of December 31, 2022, which regulates Law No. 14,286, of December 29, 2021, regarding the foreign exchange market, as well as the inflow and outflow of amounts in Brazilian reais and in foreign currencies in Brazil, in addition to the inclusion of other provisions.

This resolution will enter into force on November 01, 2023.

Read the Client Alert published on BCB Resolution No. 337, of August 22, 2023, in full.

Read BCB Resolution No. 337 in full.

BCB Resolution No. 334, August 16, 2023

Establishes minimum requirements and prudential adjustments to be followed by prudential conglomerates classified as Type 3 when pricing financial instruments at market value.

This resolution entered into force on September 01, 2023, regarding art. 11, and on January 01, 2024, regarding the other provisions.

Read BCB Resolution No. 334 in full.

National Monetary Council

CMN Resolution No. 5,100, August 24, 2023

Amends CMN Resolution No. 4,966, of November 25, 2021, which provides for the accounting concepts and criteria applicable to financial instruments, in addition to establishing and recognizing protective relationships (hedge accounting) by financial and other institutions authorized to operate by the BCB.

This resolution will enter into force on January 01, 2025, regarding Article 2, item II, and on October 01, 2023, regarding the other provisions.

Read CMN Resolution No. 5,100 in full.

CMN Resolution No. 5,096, August 24, 2023

Sets the annual global limit for contracting credit operations with bodies and entities of the public sector in 2023, to be followed by financial institutions and other institutions authorized to operate by the BCB.

This resolution entered into force on September 01, 2023.

Read CMN Resolution No. 5,096 in full.

CMN Resolution No. 5,094, August 24, 2023

Amends Resolution No. 4,815, of May 04, 2020, which provides for conditions and procedures for financial institutions to carry out discounting operations for market receivables and credit operations guaranteed by these receivables.

This resolution entered into force on September 01, 2023.

Read the Newsletter published on the CMN Resolution No. 5,094, of August 24, 2023 on the new changes related to trade receivables operations.

Read CMN Resolution No. 5,094 in full.

ALSO CHECK OUT: NEWS  |  ADMINISTRATIVE AND LEGAL DECISIONS

NEWS

Drex: BCB clarifies key questions about digital currency

Drex is the new digital currency of the BCB, formerly known as Digital Brazilian Real (Central Bank Digital Currency – “CBDC“), which promises to provide greater speed, efficiency and lower costs for various contractual and financial transactions carried out by Brazilians. The new project will also provide a safe and regulated environment for the creation of new business ventures and a more democratic access to the benefits of the digitalization of the economy for citizens and business owners. In addition, Drex will be used to popularize access to financial services, such as credit, investments and insurance, as well as to enable simultaneous transactions, such as the purchase of cars or real estate, thus ensuring security for both parties.

The BCB’s digital currency has been developed by using the Hyperledger Besu Distributed Ledger Technology (“DLT“), which incorporates smart contracts – intelligent contracts in which what is agreed between the parties is transformed into self-executing computer codes that can be implemented according to their programmed conditions, regardless of any human or intermediary intervention. Thus, programmability through smart contracts is a fundamental part of the Drex platform.

In order to standardize communication and facilitate public understanding, following the steps of the development of the Pix brand, the BCB initiated the process of developing the Drex brand in 2022, when the main aspects of the CBDC model had already become clearer. This standardization avoids the need to use technical terms when communicating with the general public – such as “digital real“, “tokenized real“, “smart settlement platform” or “smart contracts” – which are commonly used in the initiative’s technical communication, but are difficult for most people to understand, according to the BCB.

Drex, the official name of the Brazilian digital currency, will be adopted in all BCB communication relating to it, and any associated costs will be connected to the financial service provided by the offering institution. The offering institution must follow the applicable regulations and consider the competitive environment.

Read the article about Drex in full.

LIFT: Learn about the selected projects in the 2023 edition of LIFT Lab

Throughout the month of July, the Steering Committee of the 2023 edition of the Financial and Technology Innovation Laboratory (“LIFT Lab“) analyzed all 95 proposals received in 2023, and, among them, selected a set of 9 projects that could be developed in the 2023 edition, as follows:

• • • Pix Card
    • Preventive Compliance and Anti-Money Laundering (AML) Measures
    • Interoperability Gateway
    • GreenFi: Decentralized Finance for Sustainability
    • Know Your Customer (KYC) measures for blockchain credit rating
    • “Debita Lá” Pix Project
    • Pix Key Score
    • SmartSafe
    • Guaranteed Agribusiness Token (TAG)

According to the BCB, “the selected projects deal with relevant themes of the Central Bank’s innovation agenda as blockchain, tokenization of assets, crypto assets, Pix, socio-environmental responsibility and indications for improving KYC processes and preventing money laundering.”

However, due to operational and human resource limitations, the current LIFT Lab has been suspended indefinitely. Therefore, the new schedule for the development of these nine projects will be communicated by the BCB in due course.

Read the article about LIFT Lab in full.

ALSO CHECK OUT: REGULATION  |  ADMINISTRATIVE AND LEGAL DECISIONS

ADMINISTRATIVE AND LEGAL DECISIONS

Superior Court of Justice

Guarantor cannot collect charges from co-guarantor for loan borrowed alone

The 3^rd Panel of the Superior Court of Justice (“STJ“) unanimously decided that, in the event of a joint guarantee, the guarantor does not have the right to demand from the co-guarantor, through a recourse action, their proportional share of the charges for a loan borrowed exclusively to settle the guaranteed debt. The guarantor’s right of recourse for settling the entire guaranteed debt alone only covers the subject matter of the guarantee, in proportion to each person’s share.

In the case at hand, two business owners simultaneously provided guarantees in favor of a company, the purpose of which was the entire debt represented by Bank Credit Notes. When charged, one of the guarantors paid the debt in full and subsequently filed a recourse action against the co-guarantor. At the time, the claimant was also charged half the costs of a loan borrowed exclusively to settle such debt.

Upon analysis of the case, the Court of Justice of the State of São Paulo (“TJSP“) decided that, according to the contract, the defendant was not subject to settling the original debt and, therefore, could not be subject to such charges. The STJ, in turn, stated that simultaneous guarantees are governed by the common rule of passive solidarity, and the guarantors can only collect the entire debt from the principal debtor and exercise the right of recourse against the co-guarantor for their respective shares.

Read the STJ article in full.