This decision was driven by concerns over the volatility of digital currencies, especially after Bitcoin surged by 120% in 2024, reaching a price of around $80,000.
Protecting Retirees’ Savings
The ruling primarily affects large pension funds like Previ and Petros, which collectively serve millions of retirees. These funds have historically favored low-risk investments, such as government bonds, due to Brazil’s 10.5% Selic rate. However, with declining bond yields, there has been a push for diversification, which crypto was initially considered for, but now has been barred.
Alternative Investment Options
While the council has placed restrictions on cryptocurrencies, it is still allowing investments in other sectors, including agro-industrial funds and infrastructure debentures. These moves are seen as a way to support Brazil’s $150 billion export sector. However, new sustainability rules are expected to slow down the adoption of these investment avenues.
Global Contrasts in Crypto Regulation
The decision to ban crypto investments stands in stark contrast to trends seen in other parts of the world. For example, U.S. pension funds have embraced Bitcoin ETFs, with Wisconsin investing $155 million in the asset, and Florida exploring the creation of a “Bitcoin Reserve.” Meanwhile, Australia allows indirect crypto exposure, but South Korea and the Netherlands remain cautious about integrating crypto into their financial systems.
A Contradiction with Brazil’s 2022 Crypto Law
Despite the ban, Brazil’s 2022 crypto law marked a significant step toward regulating the digital asset market, where 10 million Brazilians are now holders of digital assets. The country’s real estate regulations are also evolving, with pension funds avoiding forced property sales that were previously mandated by 2030. However, they are still restricted from directly purchasing real estate.
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