The Blues have a special agreement with the Brazilian club and thanks to the deal that took Deco from the Premier League to Rio de Janeiro during 2010.
This arrangement means that the Stamford Bridge club already own 40% of the 18-year-old’s rights and they are now keen to pay out for full ownership of the full-back.
Reports emerged earlier this week from Brazilian news company Globo Esporte that a deal was close to being agreed, however the Londoners refused to comment.
But, ESPN sources believe that an agreement has been reached and that Wallace will become a Chelsea player in the not too distant future.
It is expected that the Brazil U-20 international will remain with his current club on loan for the remainder of the 2012/13 season before moving to England ahead of the new campaign.
Wallace broke into the Fluminense first-team last year, making his debut at the tender age of 17. He has since gone on to forge a reputation as one of the most promising full-backs in South America.
His qualities have not gone unnoticed resulting in him representing his nation over 15 times at U-17 level.
It’s widely believed that he will eventually break into the senior Brazilian squad and a move to Chelsea may well speed up the process.