What are the fintechs Credit?

Fintechs are companies that combine finance and technology to offer financial products and services in a more efficient, digital, and accessible way. In Brazil, the two main large groups are:

• Direct Credit Society (SCD) – financial institution that carries out loan, financing and acquisition of credit rights operations with its own resources or transfers and loans originating from the National Bank for Economic and Social Development – BNDES, exclusively through an electronic platform;

• Peer-to-Peer Lending Society (P2P) – a financial institution that mediates loans between individuals and legal entities, exclusively via an electronic platform.

Direct Credit Society (SCD)

According to Article 3 of CMN Resolution No. 5,050/2022 (“Resolution”), the SCD must be constituted as a public limited company and is subject to authorization and supervision by the Central Bank. Its minimum share capital is R$ 1 million, an amount that must be fully paid up and maintained throughout the operation.

The corporate purpose of SCDs, according to Article 7 of the Resolution, consists of carrying out loan, financing, and credit rights acquisition operations with their own resources or transfers and loans originating from the National Bank for Economic and Social Development – BNDES, exclusively through an electronic platform. The regulation also allows the provision of complementary services, such as credit analysis, collection of third-party credits, issuance of electronic money, post-paid payment instruments, acting as a payment transaction initiator, and as an insurance representative in the distribution of insurance related to the aforementioned operations, in accordance with the regulations of the National Council of Private Insurance (CNSP).

Furthermore, SCDs are prohibited from raising funds from the public, except through the issuance of shares, nor can they participate in the capital of financial institutions.

Peer-to-Peer Lending Society (P2P))

A SEP, also constituted as a public limited company, aims to intermediate loan and financing operations between individuals, exclusively via an electronic platform. Like SCDs, it must have a minimum share capital of R$ 1 million.

According to Article 16 of the Resolution, operations carried out by SEPs (Payment Institutions) are considered financial intermediation. The SEP acts as a facilitator of the transaction, without becoming jointly liable or guaranteeing payments, and must observe total transparency in the relationship between creditors and debtors.

Creditors can only be:

• natural persons;
• financial institutions;
• Investment funds whose shares are intended exclusively for qualified investors;
• securitization companies that distribute securitized assets exclusively to qualified investors; or
• Non-financial legal entities, except for securitization companies that do not fall under the provision of the item mentioned above.

Debtors, on the other hand, can only be natural or legal persons residing and domiciled in Brazil.

It is important to point out that, if the transactions are carried out with investment funds and securitization companies, as highlighted above, they must also comply with the regulations of the Securities and Exchange Commission (“CVM”).

The Central Bank also imposes limits: each individual lender can only lend up to R$ 15 thousand to the same debtor within the same platform (article 24 of the Resolution), in order to mitigate risks of concentration and excessive exposure, and it is possible that the SEP may establish other limits. This prohibition does not apply to lenders who are qualified investors, as defined by CVM regulations.

Transparency

Special Purpose Entities (SPEs) are required to disclose, in a clear and accessible manner,

Information regarding the nature and complexity of the contracted operations and services offered should be included, and in particular, a prominent warning should be included stating that loan and financing operations between individuals constitute a risky investment, without guarantee from the Credit Guarantee Fund (FGC).

Furthermore, SPVs must inform potential creditors of the factors on which the expected rate of return depends, disclosing, at a minimum, the projected payment flows, the interest rate agreed with the debtors, taxes, fees, insurance, and other expenses, as applicable, and that the rate of return...

These measures aim to balance innovation and security, preserving public confidence in the financial system and preventing abusive or high-risk practices.

The regulatory role of the Central Bank

Resolution CMN No. 5,050/2022 modernized and consolidated the rules applicable to credit fintechs, replacing previous provisions (such as the former Resolution No. 4,656/2018). The Central Bank is responsible for authorizing, supervising, and applying sanctions to SCDs and SEPs, ensuring that these institutions comply with governance standards, minimum capital, and operational transparency.

As a result, the Brazilian regulatory environment has become one of the most robust and innovative in the world regarding fintechs, stimulating competition and access to credit, without compromising the stability and integrity of the financial system.