Brazil’s CVM Launches Strategic Working Group to Regulate Securities Tokenization

The Brazilian securities watchdog (CVM) is preparing to establish an experimental regime for securities in the next 60 days. To this end, it has established a working group to propose the rules and regulations that will become the foundation of the country’s regulation.

Key Takeaways

• Brazil’s CVM established a working group to test onchain securities and draft future token regulations.
• The initiative addresses surging local demand, with tokenization volumes expected to pass $740M in 2025.
• The 120-day group will design an experimental regulatory regime to build a secure digital capital market.

Brazil’s CVM Prepares to Regulate Securities Tokenization Markets

The Brazilian Securities and Exchange Commission (CVM) has taken the first steps towards establishing clear regulations regarding securities’ tokenization.

On Friday, the CVM announced that it would establish a working group to experiment with and test onchain securities to regulate crucial activities involving security tokens, including the registration, deposit, custody, trading, and settlement of these digital assets.

In a press release, the CVM announced that the group’s responsibilities include conducting comparative studies, analyzing the results of regulatory sandbox initiatives, promoting debates with regulators and market participants, and assessing the impact of decentralized technologies on the functioning and structure of the capital market.

Furthermore, the group, composed of 14 employees of the commission and participants from other relevant parties, will also evaluate cybersecurity and other aspects to propose improvements to the current regulation, laying what the CVM called “the foundation of future regulation for securities tokenization.”

The initiative shows the relevance of these technologies to Brazil’s financial markets, where investors have already raised millions of dollars in hundreds of crowdfunding offers.

The CVM estimated that tokenization volumes would surpass $740 million in 2025, a substantial growth powered by crowdfunding rules, which allow issuances of up to $2.78 million with a 180-day duration.

CVM President Otto Lobo highlighted tokenization as “a structural transformation of the capital market” that requires innovative regulatory action.

“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,” he concluded.

The group will initially last 120 days and can be extended by another 30. During the first 60 days, it will deliver a proposal for an experimental regulatory regime for securities tokenization, while at the end of its activity, it will deliver a conclusive report with regulatory recommendations after its investigation.