Chelsea have confirmed they have agreed the signing of Wallace from Fluminense.
Wallace, 18, is an attacking right-back and has made 18 appearances for his club since making his senior debut earlier this year.
The Brazil Under-20 international will remain with Fluminense in Brazil before making the switch to Stamford Bridge in the summer of 2013.
A Chelsea announcement read: “Chelsea Football Club is delighted to announce we have agreed terms with Fluminense for the transfer of Wallace in the January window.”
ESPN learned last month that the Blues had held a 40% stake in the player as part of the deal that saw Deco join Fluminense on a free transfer in 2010. It had been expected that the Blues would pay around €5.5 million to complete the signing.