Brazil’s SEC Moves to Define the Future of Tokenized Assets

Brazil’s securities regulator, the Comissão de Valores Mobiliários (CVM), has established a working group to develop an experimental regulatory framework for tokenized securities.

The proposed framework will examine key areas including official ownership records, private key management, transaction reversals and responsibility in cases of system failures.

The CVM said the initiative will focus on how securities are registered, stored, traded and settled through distributed ledger technology (DLT).

The task force is required to submit its initial recommendations to the CVM board within 60 days of its formation. A wider evaluation process will continue for 120 days, with the possibility of an additional 30-day extension.

The group includes representatives from 14 CVM departments and may seek input from government institutions, market organizations, self-regulatory groups and external experts. The regulator said the review will also consider cybersecurity challenges, global regulatory approaches and findings from previous sandbox initiatives.

Brazil already regulates securities based on their economic function rather than the technology behind them. In 2022, the CVM clarified that the use of blockchain technology alone does not determine whether an asset should be classified as a security.

The latest review will instead concentrate on the operational structure surrounding tokenized assets.

Blockchain networks can merge roles traditionally handled by separate entities, including exchanges, custodians, registrars, clearing houses and settlement providers. This creates new regulatory questions around the authority of ownership records, private key custody, the ability to reverse transactions and accountability when technical failures occur.

Brazil’s tokenized asset sector has continued to expand. According to data from local tracking platform RWA Monitor, the country’s real-world asset market has reached approximately 12 billion reais, or about $2.34 billion. Debentures and commercial notes account for roughly $1.3 billion of that market.

The CVM has already explored blockchain-based securities issuance and secondary market trading through its regulatory sandbox program. The new working group will review those trials as it develops a broader framework for securities issued, stored and exchanged on distributed ledger networks.