CMN Resolution No. 5,050/2022, which consolidates rules on Credit Fintechs and authorizes them to act as Payment Transaction Initiators, will enter into force on January 01, 2023

On November 25, 2022, the Brazilian National Monetary Council (“CMN”) published CMN Resolution No. 5,050 (“CMN Resolution 5,050”), which revises and consolidates the rules regarding the structuring and operation of consumer credit companies (“SCD”) and peer-to-peer lending companies (“SEP”) – the so-called credit fintechs – and regulates the carrying out of loan and financing operations between persons through electronic platforms.

The new rules will enter into force on January 01, 2023, amending provisions of CMN Resolution No. 4,656, of April 26, 2018 (except for article 42), and CMN Resolution No. 4,792, of March 26, 2020.

CMN Resolution No. 5.050 has not introduced major changes, however, regarding certain aspects contemplated in previous resolutions. For instance, the minimum capital stock required of BRL1 million is maintained, as well as the corporate purpose and operating restrictions for SCDs and SEPs. In addition, prohibitions applicable to SCDs and SEPs as well as the rules for peer-to-peer lending operations via electronic platforms are maintained.

The new Resolution will allow credit fintechs to act as Payment Transaction Initiators (“ITP”). ITP activity consists in initiating payments or transfers for clients without requiring users to access their bank account, which simplifies and optimizes the payment process.

According to the Central Bank of Brazil, the carrying out of ITP activities by credit fintechs will foster further innovation within the National Financial System and stimulate competition within the ITP segment. Most importantly, the synergy between this new mechanism to be explored by such institutions and PIX – the instant payment system set up by the Central Bank – is deemed positive.

The full text of CMN Resolution 5,050 can be accessed here.

Demarest’s Banking and Finance team is available to assist our clients and provide any further clarifications on the matter that may be necessary.