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The CVM has already released a draft document on the tokenized market in Brazil for the working group’s member institutions

• The CVM advocates greater dialogue with blockchain projects before issuing stop orders or initiating sanctioning proceedings.
• Egmon Henrique states that flexible rules must be accompanied by supervision that is open to innovation and focused on service providers.
• For Eric Altafim, from ANBIMA, legal certainty and concrete use cases are essential to scaling tokenization in Brazil.

The Brazilian Securities and Exchange Commission (CVM) has already opened discussions on an initial draft related to its experimental tokenization initiative. The document is being reviewed by the institutions participating in the working group established by the agency and was accompanied by an explanatory note outlining the project’s objectives.

The information was presented by Egmon Henrique, superintendent at the CVM, on Thursday, the 3rd, during Token Summit Brasil, promoted by Liqi, VBSO Advogados, and Oliveira Trust, with support from ABcripto and ABfintechs.

According to Henrique, tokenization was selected as one of the CVM’s priorities because of its potential to bring Brazil to the same level of competitiveness as the United States and European countries. The initiative involves creating local infrastructure and reviewing the rules governing the distribution of tokenized products.

“This was the main reason for undertaking this project: to establish local infrastructure and review the rules for distributing these products, precisely to make Brazil as competitive as European countries and the United States,” he stated.

Draft already under discussion within the Working Group

The working group brings together different areas of the CVM to ensure that the agency has a comprehensive view of the potential impacts of tokenization on the capital market. According to the superintendent, the WG maintains an intensive schedule of meetings with Brazilian and foreign institutions.

Those consulted include international stock exchanges already developing tokenization structures and Brazilian companies with projects focused on the sector. The objective is to understand different models, identify risks, and gather proposals that could be incorporated into future regulations.

As an initial outcome, the CVM prepared a draft related to the experimental initiative. According to Henrique, the text was shared with the institutions participating in the WG discussions and remains part of the project’s development stage, rather than representing definitive regulation.

According to him, the meetings are essential to ensure that the agency does not analyze the subject solely through the lens of established concepts. The intention is to understand how these structures work in practice and what regulatory adjustments will be necessary.

Tokenization is being treated as a competitiveness issue

Henrique acknowledged that public administration faces several simultaneous demands and must determine which projects will be prioritized. In the CVM’s case, tokenization was selected because of its potential effects on the international competitiveness of the Brazilian market.

According to him, Brazil should not simply observe how the United States and Europe regulate new products and subsequently reproduce the solutions adopted abroad. In certain areas, there is still no established international model that can simply serve as a reference.

For this reason, the CVM intends to participate in shaping this market and develop a framework suited to Brazil’s characteristics. The objective is to prevent companies and investors from moving to jurisdictions considered more receptive to innovation.

“It is almost as if this were truly a race. We need to come in first to make Brazil practically an innovation hub,” he stated.

As an example, Henrique mentioned the United Arab Emirates, which has been incorporating activities related to crypto assets into its rules and attracting companies interested in operating in an environment where the regulator understands these models.

For the superintendent, demonstrating that the regulatory authority understands the technology and is willing to engage in dialogue already represents an important component of legal certainty. The priority given to tokenization therefore seeks to narrow the gap with leading international markets and position Brazil as an active participant in this transformation.

According to Henrique, the CVM wants to establish a supervisory approach that is more open and closer to participants developing blockchain projects. The proposal is for any questions regarding an initiative to be discussed before measures such as a stop order are adopted or sanctioning proceedings are initiated.

Companies need legal certainty to make the investments required to develop new products without fearing that they may subsequently be confronted with a restrictive regulatory interpretation.

“The ideal approach is to talk to the participant, understand how the project works, what innovation is being proposed, and how the functions and obligations established by the regulations continue to be fulfilled,” he stated.

“We are no longer in 1700”

In advocating a more open approach to international innovations, Henrique stated that “we are no longer in 1700.” The phrase was used to emphasize that regulatory or territorial barriers are not sufficient to prevent Brazilian investors from accessing products offered in other countries.

The superintendent cited trading models available 24 hours a day, seven days a week, as well as systems offering instant settlement. These structures can be questioned and assessed by the regulator, but they cannot be ignored simply because they are not yet covered by Brazilian regulations.

“There is no point in introducing a prohibitive rule and thinking the problem has been solved. Access is very easy today,” he declared.

Henrique also noted that attempts to restrict foreign platforms through geographic blocking do not necessarily eliminate access. In his view, the regulator’s response should be to study emerging models, including those initially developed outside the regulated environment.

Based on this analysis, the CVM will be able to establish requirements for similar initiatives to operate more safely in Brazil. According to the superintendent, combining innovation with legal certainty would help attract companies, investors, and capital to the country.

CVM supervision must keep pace with more flexible rules

For the superintendent, legal certainty does not depend solely on the publication of new rules. It will also be necessary to change how supervision interprets and monitors business models that have not yet become established in the traditional market.

Henrique argued that CVM regulations should have a degree of “flexibility” to accommodate future innovations. Rather than establishing completely closed models or rules tied to a specific technology, the regulator should focus primarily on the functions performed by participants.

The technology used for registration, trading, or settlement may change over time, but obligations related to custody, security, and investor protection remain. Therefore, regulation based on functions would be better equipped to keep pace with market developments.

“There is no point in promoting a regulatory change without a corresponding change in supervision. There is no point in having an open and flexible rule if, at the time of supervision, it is interpreted in a completely literal and restrictive manner,” he declared.

The statement does not represent an abandonment of supervisory measures or stop orders. The approach proposed by the superintendent is for the regulator to seek to understand the project, whenever possible, before concluding that the activity is not compliant with capital market rules.

CVM shifts its focus from tokens to service providers

Henrique also stated that the regulatory debate has matured as it has moved away from treating blockchain and crypto assets as the main problems. In the past, according to him, much of the discussion focused on the potential risks of the technology itself or on failures involving tokens.

As the market has developed, attention has shifted toward the companies responsible for infrastructure, custody, and other services related to tokenized assets.

“We came to realize that the problem was not necessarily the crypto asset or the token itself. In many cases, the problem was precisely the service providers,” he said.

This shift in focus allowed the discussion to advance toward defining the requirements necessary for these services to be provided safely and efficiently. According to Henrique, it also helped reduce the existing prejudice against the crypto asset market.

This approach is expected to be part of the CVM’s work related to tokenization. According to the superintendent, the objective is no longer to debate whether distributed ledger technology, known by the acronym DLT, works, but to understand how it can be incorporated into capital market infrastructure.

The discussion is expected to cover the definition of the participants responsible for providing services, the characteristics of the infrastructure, and the mechanisms that will allow the CVM to supervise this new environment.

ANBIMA says the challenge now is to scale tokenization

Eric Altafim, director at ANBIMA, reinforced that clear and robust regulation is essential for blockchain-based projects to scale. According to him, technology alone does not correct flaws in an asset’s structuring or in the definition of investors’ rights.

“It is possible to do things wrong even when using blockchain. It is the classic ‘trash in, trash out’ principle. If you enter incorrect information or structure the rights incorrectly at the outset, the result will also be incorrect in the end,” he explained.

As an example of a legal issue that remains relevant, Altafim cited asset segregation in the crypto asset market. According to him, the subject was discussed during the development of the regulatory framework but remains unresolved, with no solution considered appropriate by the sector having yet been reached.

For ANBIMA’s director, tokenization has already moved beyond the stage in which the market presented technologies without clearly defined applications. Today, according to him, real and tangible use cases exist, and the challenge has become creating the conditions necessary to expand their adoption.

“This is no longer a question of whether it will happen. It has already happened. The question now is how to scale something that already exists,” he stated.

Altafim also noted that converting an asset into a token does not automatically increase its value or create liquidity. The benefit must be linked to a concrete application, such as cost reduction, process automation, or greater efficiency in the movement of collateral.

He cited margin call processes as an example. In traditional structures, the interval between a collateral requirement and a potential enforcement can increase the required margin and the cost of capital. With faster and automated settlements, it would be possible to reduce this exposure and make certain transactions more efficient.