Brazil’s securities regulator, the Comissão de Valores Mobiliários (CVM), said it had created a working group to draft an experimental framework for tokenized securities.
The regulator said the framework would cover the registration, custody, trading and settlement of securities using distributed ledger technology.
The group must send its first proposal to the CVM board within 60 days of its formal implementation, while a broader review will last 120 days, with a possible 30-day extension.
The group brings together 14 CVM departments and can consult government agencies, market associations, self-regulatory organizations and external specialists. It will also examine cybersecurity risks, international regulatory models and the results of previous sandbox programs, the regulator said.
Brazil already applies securities law based on the economic characteristics of a token. The 2022 CVM guidelines clarified that the use of blockchain does not change the qualification of an asset as a security.
The new review will focus on what is happening around the asset.
Blockchains can combine functions that are normally divided between exchanges, custodians, registrars, custodians and settlement systems. This raises questions about who controls the official property registry, how private keys are kept, when transactions can be reversed and who is responsible if systems fail.
