Brazil’s securities regulator, Comissão de Valores Mobiliários (CVM) said it created a working group to draft an experimental framework for tokenized securities.
The regulator said the framework will cover registration, custody, trading and settlement of securities using distributed ledger technology.
The group must send its first proposal to CVM’s board within 60 days of being formally installed, while a broader review runs for 120 days with a possible 30-day extension.
The group brings together 14 CVM departments and can consult public authorities, market associations, self-regulatory bodies and external specialists. It will also review cybersecurity risks, international regulatory models and results from past sandbox programs, the regulator said.
Brazil already applies securities laws according to a token’s economic characteristics. The CVM’s 2022 guidance clarified that using blockchain does not change whether an asset qualifies as a security.
The new review will focus on what is happening around the asset.
Blockchains can combine functions that are usually split between exchanges, custodians, registrars, depositories and settlement systems. It raises questions about who controls the official record of ownership, how private keys are stored, when transactions can be reversed, and who is responsible when systems fail.
