The Ministry of Economy, through its National Department of Business Registration and Integration, published on December 1, 2020, a Circular Letter SEI No. 4081/2020/ME, confirming the possibility of paying in cryptocurrency (or digital/virtual currencies) to compose share capital, in response to a consultation of the São Paulo Board of Trade (JUCESP).
In the letter, the Ministry of Economy informed that, there is no express legal prohibition to pay in capital with cryptocurrency (or digital/virtual currencies), such position being supported by art. 997, III of the Civil Code and art. 7 of Law 6404/1976:
“Art. 997. The company is incorporated by means of a written contract, pri-vate or public, which, in addition to clauses stipulated by the parties, will mention:
- III – the capital of the company, expressed in local currency, being able to comprise any kind of assets, susceptible of pecuniary evaluation.
- Art. 7 The share capital may be formed with contributions in cash or in any kind of assets susceptible to valuation in cash.”
Therefore, the share capital of a company may be composed entirely of cryptocurrencies, in addition to the possibility of using such means in corporate operations, such as mergers and acquisitions of companies.
Furthermore, in the event of special proceedings that should be observed by the Boards of Trade, namely, in the operationalization of the registrations of the acts involving the use of cryptocurrencies, the body informed that “same rules apply to the payment of capital with transferable assets, according to the respective corporate type, should be respected, being limited to the Boards of Trade to “examine the fulfilment of the legal formalities” of the act that is the object of filing (art. 40 of Law 8.934/1994)”.
Legal nature of cryptocurrencies
Finally, the Ministry of Economy also clarified, according to questions sent by JUCESP, that it follows the understandings on the legal nature of cryptocurrencies as manifested by the Central Bank of Brazil, the Securities and Exchange Commission and the Federal Revenue Service.
The Central Bank of Brazil has issued statements declaring ” the so-called virtual currencies are not to be confused with the ‘electronic currency’ dealt with in Law 12.865/2013, and its by-laws regulation”; and the Securities Commission has issued notes saying that “such virtual assets, depending on the economic context of their issuance and the rights granted to investors, may represent securities under Article 2 of Law 6.385/1976”.
Meanwhile, the Brazilian IRS considers cryptocurrencies as “financial assets, requiring their inclusion in the annual income tax return, in the “other assets” field of the assets and rights form.
Lotti & Araújo is available to assist its customers and partners and to provide assistance in resolving any possible doubts regarding the use of cryptocurrencies in the incorporation of companies’ share capital. Please contact us.