The National Monetary Council (CMN) has prohibited the offering and trading of derivatives linked to prediction markets in Brazil. The measure was established by CMN Resolution 5,298/26, issued on April 24, 2026.
Prediction markets are those in which contracts are traded whose value fluctuates based on expectations regarding the occurrence of a specific event — for example, a contract that pays out if "Brazil raises the interest rate at the next meeting" or if "candidate X wins the election." The price of these contracts indicates the implied probability of the outcome.
What Is Prohibited
Articles 3 and 4 of CMN Resolution 5,298/26 prohibit the offering and trading of derivatives whose underlying asset is linked to events that do not constitute an economic-financial benchmark — with particular emphasis on:
- real sporting events;
- virtual events in online games; and
- political, electoral, social, cultural, and entertainment events, as well as any others that, at the discretion of the Brazilian Securities and Exchange Commission (CVM), do not constitute an economic-financial benchmark.
What Constitutes an Economic-Financial Benchmark
The regulation clarifies that the following are considered economic-financial benchmarks, by way of example:
- indices and rates, such as prices, interest rates, exchange rates, and credit indicators;
- commodity prices;
- prices of assets/securities traded on organized markets or registered with authorized infrastructures; and
- other relevant economic/financial benchmarks, provided they are based on consistent and verifiable methodologies.
Accordingly, underlying assets of derivatives that are not considered economic-financial benchmarks may be prohibited by determination of the CVM. This restriction supplements those already in place under Resolution 3,505/07, which regulates the contracting of derivatives by financial institutions, and CMN Resolution 5,070/23, which addresses credit derivatives.
Territorial Scope: Impacts on Foreign Products
The CMN has provided that the restriction also covers offerings, within national territory, of derivatives traded abroad, as regulated by the CVM. This provision is likely to impact models in which exposure to prediction markets is offered to the Brazilian public through:
- instruments/contracts entered into outside the country but distributed (directly or indirectly) in Brazil; and/or
- platforms and intermediaries that promote or encourage local investors' access to these products.
The Role of the CVM
The CVM will adopt, within the scope of its powers, the necessary complementary regulatory and supervisory measures to enforce the prohibitions and guidelines set forth in the Resolution, as provided in Article 5.
Market Context and International Comparison
The Resolution emerges in a scenario in which prediction markets had been structured locally through multiple channels: derivatives with event-driven underlyings, offerings of foreign products to the Brazilian public, and even structures that replicate outcomes associated with prediction markets — including through crowdfunding arrangements.
In the United States, the Commodity Futures Trading Commission (CFTC) treats prediction markets as derivative transactions, subjecting them to the applicable regulatory framework — including rules and controls implemented after the 2008 crisis. In April 2026, the agency reaffirmed its exclusive jurisdiction over these markets.
Key Considerations and Practical Impacts
With CMN Resolution 5,298/26, event-linked derivatives are now prohibited in Brazil, including when distributed locally from foreign markets. Market participants should review portfolios and distribution channels, strengthen product approval governance to prevent non-compliant offerings, and monitor the CVM's complementary regulation and supervisory actions.
For more information on this topic, please contact the Machado Meyer team.
