Brazil's Securities and Exchange Commission (CVM) established a working group on Friday to regulate securities tokenization. The initiative addresses surging local demand, with tokenization volumes expected to surpass $740 million in 2025. The working group will test onchain securities and draft regulations for registration, deposit, custody, trading, and settlement of security tokens. CVM President Otto Lobo described tokenization as a structural transformation of the capital market requiring innovative regulatory action. The 120-day group includes 14 CVM employees and participants from other relevant parties, with responsibilities including comparative studies and analysis of regulatory sandbox initiatives.
CVM Working Group Structure and Timeline
The CVM announced the working group will initially last 120 days and can be extended by another 30 days. The group is composed of 14 employees of the commission and participants from other relevant parties. During the first 60 days, the group will deliver a proposal for an experimental regulatory regime for securities tokenization. At the end of its activity, the group will deliver a conclusive report with regulatory recommendations.
Regulatory Scope Covers Registration Through Settlement
The working group's responsibilities include regulating activities involving security tokens, including registration, deposit, custody, trading, and settlement of these digital assets. The group will conduct comparative studies, analyze results of regulatory sandbox initiatives, promote debates with regulators and market participants, and assess the impact of decentralized technologies on the functioning and structure of the capital market. The group will also evaluate cybersecurity aspects to propose improvements to current regulation, laying what the CVM called the foundation of future regulation for securities tokenization.
Brazil Tokenization Market Reaches $740M Projection for 2025
The CVM estimated that tokenization volumes would surpass $740 million in 2025. The growth is powered by crowdfunding rules, which allow issuances of up to $2.78 million with a 180-day duration. Investors have already raised millions of dollars in hundreds of crowdfunding offers in Brazil's financial markets. CVM President Otto Lobo stated, "With this Working Group, the CVM brings together technical knowledge to assess opportunities, face challenges, and build, in a coordinated manner, the foundations for a modern, secure regulatory environment aligned with the evolution of the Brazilian capital market."
FAQ
What did Brazil's CVM announce on Friday regarding securities tokenization?
Brazil's CVM announced the establishment of a working group to experiment with and test onchain securities and regulate activities involving security tokens, including registration, deposit, custody, trading, and settlement of these digital assets.
How long will the CVM working group operate and what will it deliver?
The working group will initially last 120 days with a possible 30-day extension. During the first 60 days, it will deliver a proposal for an experimental regulatory regime for securities tokenization, and at the end of its activity, it will deliver a conclusive report with regulatory recommendations.
What are Brazil's tokenization volume projections for 2025?
The CVM estimated that tokenization volumes would surpass $740 million in 2025, driven by crowdfunding rules that allow issuances of up to $2.78 million with a 180-day duration.
