Brazil’s CVM forms group to draft securities tokenization rules

Brazil’s securities regulator, the Comissão de Valores Mobiliários (CVM), has formed a working group to design rules for securities tokenization and must present a proposal for an experimental regulatory regime within 60 days.

The group will test on-chain securities and draft rules for registration, deposit, custody, trading and settlement of tokenized securities. The CVM set an initial mandate of 120 days for the group, with an option to extend by 30 days. Officials are required to submit the experimental-regime proposal within the first 60 days and a final report with regulatory recommendations at the end of the group’s work.

The working group includes 14 CVM staff members and participants from other relevant parties. Its tasks include running practical tests, conducting comparative studies, reviewing results from regulatory sandboxes, and holding discussions with other regulators and market participants.

Members will assess how distributed ledger technologies affect market structure and functioning, and will evaluate cybersecurity and operational risks linked to tokenized securities and custody arrangements.

The CVM cited strong local interest in tokenized offerings. It estimated that tokenization volumes in Brazil could exceed $740 million by 2025. The regulator noted crowdfunding rules allow issuances of up to 15 million reais (about $2.78 million) with a maximum duration of 180 days, and that investors have already raised millions through hundreds of crowdfunding offers.

CVM President Otto Lobo described tokenization as ‘a structural transformation of the capital market’ and said the group will combine technical knowledge to assess opportunities, address challenges and build bases for a modern, secure regulatory environment.

The group is expected to recommend changes to existing rules where needed and propose an experimental framework to allow controlled market tests of tokenized securities. The CVM said outcomes will guide how tokenization is integrated into Brazil’s capital markets and could affect registration, custody and settlement practices for digital securities issued and traded in the country.