Brazil Accelerates Digital Asset Plans With New Tokenization Task Force

Brazil’s securities regulator, the Comissão de Valores Mobiliários (CVM), has created a specialized working group to develop a pilot framework for tokenized securities and explore how blockchain-based financial products should be regulated.

The proposed framework will examine critical areas such as the verification of asset ownership, private key custody, the ability to reverse transactions and the allocation of responsibility when technology platforms experience failures.

The regulator said the initiative will focus on securities activities carried out through distributed ledger technology, including asset registration, custody arrangements, market trading and settlement procedures.

The working group is expected to submit its first recommendations to the CVM board within 60 days of its official establishment. Following that, the regulator will conduct a broader 120-day assessment, with the possibility of extending the review by another 30 days.

The task force includes officials from 14 CVM departments and may consult with public agencies, financial market groups, self-regulatory organizations and industry experts. Its review will also consider cybersecurity concerns, international regulatory approaches and lessons from previous blockchain sandbox initiatives.

Brazil’s securities framework currently evaluates assets based on their economic purpose rather than the technology behind them. In 2022, the CVM confirmed that the use of blockchain does not automatically determine whether an asset falls under securities regulation.

Instead, the latest initiative will focus on the infrastructure and operational challenges created by tokenized markets.

Blockchain systems can merge functions typically managed by separate financial intermediaries, including exchanges, custodians, registrars, depositories and settlement networks. This raises important regulatory questions about the control of official ownership records, private key protection, transaction reversals and liability in cases of system disruptions.

Brazil’s tokenized asset market has continued to grow as adoption increases. According to RWA Monitor, the country’s real-world asset sector has reached roughly 12 billion reais, or about $2.34 billion. Debentures and commercial notes account for nearly $1.3 billion of the total market.

The CVM has already tested blockchain-based securities issuance and secondary market trading through its regulatory sandbox program. The newly established working group will analyze those experiments as it develops a broader framework for securities that are issued, stored and traded using distributed ledger technology.