Key facts
- Brazil's securities regulator (CVM) has established a working group to create a framework for tokenized securities.
- The group has a 60-day deadline to submit its initial proposal.
- The framework will address key aspects of tokenized securities, including ownership records, private key custody, transaction reversibility, and system liability.
- Brazil's tokenized asset market is currently valued at approximately 12 billion reais ($2.34 billion).
Brazil's securities regulator, the Comissão de Valores Mobiliários (CVM), has established a working group tasked with developing an experimental framework for tokenized securities. This initiative comes as the country's real-world asset market has grown to approximately 12 billion reais ($2.34 billion).
The working group, comprising 14 CVM departments, is expected to deliver its first proposal within 60 days of its formal installation. A more comprehensive review will follow, lasting 120 days with a potential 30-day extension. The group is authorized to consult with government agencies, market associations, self-regulatory bodies, and external specialists.
The framework will focus on critical operational and legal aspects of tokenized securities, including the registration, custody, trading, and settlement processes. Key issues to be addressed involve the maintenance of official ownership records, the secure holding of private keys, the conditions under which transactions can be reversed, and liability in cases of system failures. The group will also assess cybersecurity risks and examine international regulatory approaches, drawing on insights from previous regulatory sandbox experiments.
Brazil's existing securities law already applies based on the economic characteristics of a token, with CVM guidance from 2022 clarifying that blockchain usage does not alter an asset's classification as a security. The current review aims to refine the regulatory landscape surrounding the operational environment of these tokenized assets.