Brazil’s securities regulator, the Comissão de Valores Mobiliários (CVM), has launched a working group tasked with creating an experimental framework for tokenized securities.
The initiative will explore major regulatory questions surrounding tokenized assets, including how official ownership is recorded, how private keys are safeguarded, whether transactions can be reversed and which parties are responsible when technology systems encounter failures.
The CVM said the proposed framework will examine the full lifecycle of securities issued through distributed ledger technology, including registration, custody, trading and settlement processes.
The working group must deliver its first set of recommendations to the CVM board within 60 days of its official formation. A broader assessment will continue for 120 days, with the option to extend the review period by another 30 days.
The task force includes members from 14 different CVM divisions and will have the ability to consult with government agencies, industry groups, self-regulatory organizations and external specialists. The regulator said the review will also examine cybersecurity concerns, international approaches to tokenized markets and lessons from previous blockchain sandbox experiments.
Brazil’s existing securities framework is based on an asset’s economic characteristics rather than the technology used to issue it. In 2022, the CVM confirmed that blockchain technology alone does not determine whether a digital asset falls under securities regulation.
The new initiative will instead focus on the infrastructure and processes surrounding tokenized securities.
Distributed ledger systems can combine functions traditionally handled by multiple financial intermediaries, including exchanges, custodians, registrars, depositories and settlement providers. This creates new challenges around determining the official ownership record, managing private keys, handling transaction disputes and assigning liability when systems malfunction.
Brazil’s tokenized real-world asset market has been expanding steadily. Data from Brazilian platform RWA Monitor shows the sector has grown to approximately 12 billion reais, or around $2.34 billion. Debt instruments such as debentures and commercial notes represent about $1.3 billion of that total.
The CVM has previously tested blockchain-based securities issuance and secondary trading through its regulatory sandbox. The newly formed working group will assess those pilot projects as it works toward developing a broader regulatory approach for securities issued, held and traded on distributed ledger platforms.
