See how the new exchange rate mark will change your life

Report from Valor Investe showed the impacts and changes brought about by the new exchange rate framework. Dr. Marcos Catão, partner at Maneira Advogados, was heard to speak on the topic.

See how the new exchange rate framework will change your life

Returning from a trip abroad and selling the remaining dollars to a friend is now allowed

By Gabriela da Cunha, Valor Investe— Rio

12/30/2022

The New Foreign Exchange Regulatory Framework comes into force this Saturday (31). Provided by Law 14,286/2021, the new standard brings, among other new features, the possibility for companies and individuals to operate directly in the currency buying and selling market and promises to simplify international transfers. See some highlights of the regulation that seeks to modernize the foreign exchange market, make processes simpler and increase accessibility to the market.

Limit on travel

One of the consequences of the new law that affects the investor's life is, for example, the increase in the limit of cash that each person can carry on international trips, going from R$10,000 to US$10,000. This applies to both those arriving and leaving Brazil.

Negotiation between individuals

The common practice of returning from a trip abroad and selling the remaining dollars to a friend or acquaintance is now allowed (until then, in theory, this was prohibited). The new rule, however, only applies to “occasional and non-professional” operations.

“The regulation of the sale of up to US$500 between individuals, legalizing the sale of excess currency from a trip, for example, between people, is just one aspect that makes life easier for Brazilians”, highlightsJuliana Strohl, Legal and Compliance leader at fintech Kamino.

In practice, authorization should allow fintechs to organize this “peer to peer” market, facilitating the gathering of people interested in buying and selling small amounts of currency.

Investments abroad

The facilitation of investments abroad, which has increasingly become popular with retail in recent years, is also expected with the new rule. “This should also be driven by the authorization for financial institutions in Brazil to open accounts in foreign currency, which until then was done very strictly”, recalls Erik Oioli, partner at VBSO Advogados.

Foreign currency account

The law states that the Central Bank (BC) is responsible for regulating foreign currency accounts in the country, including the requirements and procedures for opening and operating them. The BC states that there is the possibility of gradually and safely expanding the possibility for individuals and legal entities to hold accounts in foreign currency.

Account abroad

Opening a deposit account abroad was already possible, but the new legislation expands and reinforces this prerogative, by stating that institutions authorized by the BC will be able to allocate, invest and allocate for credit and financing operations, in the country and abroad, resources raised here or abroad.

For companies that already offer the service, such as Nomad, a fintech that allows the opening of a current account in dollars at a North American bank in a 100% digital way, the new regulation is seen as an opportunity to have more competitive operating conditions and, therefore, expand and improve services to customers.

“The investment necessary to comply with regulatory and procedural obligations [called the cost of regulatory compliance] must be less onerous”, says Nathalia Rodrigues, executive director of fintechwhich allows investments abroad in a way that is already integrated with the contracting of foreign exchange operations. “With the simplification of processes and the adoption of a risk-based approach to evaluating the operations desired by customers, we see space for better quality and customized services”, he adds.

More competition

Another expected positive effect of the new standard is increased competition in the foreign exchange market. This should give consumers the benefit of reduced rates, according to the Central Bank's (BC) director of regulation, Otavio Damaso. In his opinion, the new exchange rate regulation will facilitate the entry of fintechs into the segment. “Our expectation for the coming years, just as we saw several fintechs emerging to fill gaps in payments, is to see fintechs entering to bring more rationality, convenience and innovation in foreign exchange operations”, he said at an event held by the Brazilian Foreign Trade Association.

The possibility of payment institutions requesting authorization from the Central Bank to operate foreign exchange in transactions of up to US$100,000 is also on the radar, but the deadline has been postponed to July 1st.

Less bureaucracy

The provision of information to the Central Bank and foreign trade negotiations should also be facilitated. “Even today, closing an exchange contract is not necessarily an easy task and is partly explained by the existence of very old rules and a Brazilian history of rigorous control of the entry and exit of currency”, says partner at VBSO Advogados.

For those who carry out exchange transactions worth up to US$50,000, the number of codes used to register the transaction should also decrease. 10 codes must be adopted to identify operations, which should bring more agility to a large part of the market, as there are currently more than 180.

Many of these rules were put to public hearing by the Central Bank. For Marcos Catão, partner in the Tax area at Maneira Advogados, the new proposal adapts the market to the current reality of financial products. "We had a corrupt ecosystem when it comes to exchange rates: restrictions and harsh compliance for fintechs and platforms; high tax burden and bureaucratic requirements for new entrants. For no other reason, we have been living, for years, with very high volatility of the real and very high spreads", he says.

Waiting for greater flexibility in the foreign exchange market, however, could generate a potential side effect that would be the dollarization of the economy, says Oioli, from VBSO Advogados. “This becomes a point of attention especially in cases of economic crises and political instability that could lead to a flight from reais to stronger currencies”, he explains.

*With PRO Value information.

(Photo: Getty Images)

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