The 18-year-old right-back will complete his signing from Fluminense  in the January transfer window but remain in South America until the end of the season.
The youth international will become the fifth Brazilian at Stamford Bridge , joining David Luiz, Ramires, Oscar and Lucas Piazon, The Sun reports.
"It's always helpful having Brazilian team-mates playing alongside you, as they can give you some important advice about the lifestyle, the football and the language," Wallace said.
"Now that I'm moving to London I'll have to learn some English. I watch Chelsea games whenever I can and don't miss a chance to see them playing on TV," he added.
Wallace, who played with Piazon in the Under-17 World Cup last year, has made 18 League appearances for Fluminense since his debut at the start of the season, the paper said. (ANI )