Brazil’s Securities Regulator Unveils 2024 Sandbox for Tokenization

Brazil’s Comissão de Valores Mobiliários (CVM) has revealed its plans to initiate a second regulatory sandbox program in 2024. Speaking at Rio Innovation Week on October 4, Daniel Maeda, the superintendent of institutional investor supervision at CVM, shared that the regulatory body is exploring the creation of a regulatory sandbox to accommodate various use cases of tokenization, with the program slated for a potential launch in 2024.

Brazil’s CVM Announces 2024 Launch of Second Regulatory Sandbox for Tokenization

This forward-thinking move comes after CVM’s successful experience in tokenizing approximately $36 million in assets. Maeda emphasized that CVM’s approach is open and adaptable, with no predefined use cases, as they aim to foster innovation without constraints. He mentioned that areas of interest for tokenization applications include agribusiness and Environmental, Social, and Governance (ESG) sectors.

The superintendent also noted that CVM intends to synchronize its efforts with changes in Brazil’s cryptocurrency market, including those related to the country’s central bank digital currency, the Drex. Maeda stressed the importance of learning from the experiences of other countries and examining the evolving landscape of digital asset regulation.

While acknowledging the significance of the United States Securities and Exchange Commission (SEC), Maeda refrained from judging their regulatory stance. He emphasized that CVM has recognized the many benefits of tokenization, such as enhanced transparency, reduced costs, and greater democratization of investments.

In the backdrop of surging cryptocurrency adoption in Brazil, the country’s central bank recently tightened its regulatory measures in October. Governor Campos Neto highlighted concerns about potential links between cryptocurrencies and tax evasion or illicit activities.

The regulatory landscape in Brazil was further defined when President Luiz Inácio Lula da Silva signed a framework into law in June. This framework outlined the distinct roles of the central bank and CVM in regulating digital assets. In an effort to enhance personal data protection and prevent fraud, Brazil is set to launch a program in November that will issue identification documents via a private blockchain.